1 SENATE/HOUSE OF REPRESENTATIVES
2 THE 21ST LEGISLATURE
3 INTERIM OF 2001
4
5
6
7
8
9 JOINT SENATE-HOUSE INVESTIGATIVE COMMITTEE HEARING
10 OCTOBER 31, 2001
11
12
13
14 Taken at the State Capitol, 415 South Beretania,
15 Conference Room 325, Honolulu, Hawaii, commencing at
16 9:13 a.m. on Wednesday, October 31, 2001.
17
18
19
20 BEFORE: SHIRLEY L. KEYS, RPR, CM, CSR 383
21 Notary Public, State of Hawaii
22
23
24
25
Page 1
1 APPEARANCES:
2
3 State-House Investigative Committee:
4 Co-Chair Senator Colleen Hanabusa
5 Co-Chair Representative Scott Saiki
6 Vice-Chair Senator Russell Kokubun
7 Vice-Chair Representative Blake Oshiro
8 Senator Jan Yagi Buen
9 Representative Ken Ito
10 Representative Bertha Kawakami
11 Representative Bertha Leong
12 Representative Barbara Marumoto
13 Senator David Matsuura
14 Senator Norman Sakamoto
15 Senator Sam Slom
16
17 Also Present:
18
19 Special Counsel James Kawashima
20 Dr. Mitsugi Nakashima
21 Mr. Herbert Watanabe
22 Galen Onouye, Esquire
23 Ms. Paula Yoshioka
24 Richard Nakamura, Esquire
25
Page 2
1 I N D E X
2
3 WITNESS: MITSUGI NAKASHIMA and HERBERT WATANABE
4
5 EXAMINATION BY: PAGE
6 Special Counsel Kawashima 7
7 Vice-Chair Representative Oshiro 50
8 Vice-Chair Senator Kokubun 56
9 Representative Ito 62
10 Senator Slom 66
11 Representative Kawakami 71
12 Senator Buen 77
13 Representative Leong 79
14 Representative Marumoto 83
15 Co-Chair Senator Hanabusa 86
16 Co-Chair Representative Saiki 93
17 Representative Ito 96
18 Special Counsel Kawashima 97
19 Co-Chair Senator Hanabusa 98
20 Senator Slom 100
21 Special Counsel Kawashima 103
22
23
24
25
Page 3
1 WITNESS: PAULA YOSHIOKA
2
3 EXAMINATION BY: PAGE
4 Special Counsel Kawashima 110
5 Vice-Chair Senator Kokubun 145
6 Vice-Chair Representative Oshiro 149
7 Senator Slom 156
8 Representative Ito 160
9 Senator Matsuura 166
10 Representative Kawakami 171
11 Senator Sakamoto 176
12 Representative Marumoto 182
13 Co-Chair Representative Saiki 186
14 Co-Chair Senator Hanabusa 190
15 Special Counsel Kawashima 197
16 Vice-Chair Senator Kokubun 210
17 Vice-Chair Representative Oshiro 213
18 Senator Matsuura 217
19 Representative Marumoto 219
20 Senator Sakamoto 221
21 Co-Chair Representative Saiki 224
22 Co-Chair Senator Hanabusa 226
23
24
25
Page 4
1 CO-CHAIR REPRESENTATIVE SAIKI: Good
2 morning. We'd like to convene our Joint Investigative
3 Committee to investigate the State's efforts to comply
4 with the Felix Consent Decree. We'll begin with the roll
5 call.
6 CO-CHAIR SENATOR HANABUSA: Co-Chair
7 Saiki?
8 CO-CHAIR REPRESENTATIVE SAIKI:
9 Present.
10 CO-CHAIR SENATOR HANABUSA: Vice-Chair
11 Kokubun?
12 VICE-CHAIR SENATOR KOKUBUN: Here.
13 CO-CHAIR SENATOR HANABUSA: Vice-Chair
14 Oshiro?
15 VICE-CHAIR REPRESENTATIVE OSHIRO:
16 Here.
17 CO-CHAIR SENATOR HANABUSA: Senator
18 Buen?
19 SENATOR BUEN: Here.
20 CO-CHAIR SENATOR HANABUSA:
21 Representative Ito, excused. Representative Kawakami?
22 Representative Leong?
23 REPRESENTATIVE LEONG: Here.
24 CO-CHAIR SENATOR HANABUSA:
25 Representative Marumoto?
Page 5
1 REPRESENTATIVE MARUMOTO: Present.
2 CO-CHAIR SENATOR HANABUSA: Senator
3 Matsuura is excused. Senator Sakamoto, excused. Senator
4 Slom?
5 SENATOR SLOM: Here.
6 CO-CHAIR SENATOR HANABUSA: We have
7 quorum.
8 CO-CHAIR REPRESENTATIVE SAIKI: Thank
9 you, members. This morning we will consolidate the
10 testimony of our first two witnesses, Mr. Herbert
11 Watanabe and Dr. Mitsugi Nakashima, who are both seated
12 at the witness table. We'll administer the oath at this
13 time.
14 CO-CHAIR SENATOR HANABUSA: Okay.
15 Dr. Mitsugi Nakashima, do you solemnly swear or affirm
16 that the testimony you're about to give will be the
17 truth, the whole truth and nothing but the truth?
18 DR. NAKASHIMA: I do.
19 CO-CHAIR SENATOR HANABUSA: Thank you.
20 Mr. Herbert Watanabe, do you solemnly swear or affirm
21 that the testimony you're about to give will be the
22 truth, the whole truth and nothing but the truth?
23 MR. WATANABE: I will.
24 CO-CHAIR SENATOR HANABUSA: Thank you
25 very much. Members, we'll be following our usual
Page 6
1 protocol. We'll begin with Mr. Kawashima.
2 CO-CHAIR REPRESENTATIVE SAIKI: Excuse
3 me. Could you raise your microphones, please, before we
4 start? Thank you.
5 E X A M I N A T I O N
6 BY SPECIAL COUNSEL KAWASHIMA:
7 Q. All right, gentlemen, I guess I'll start asking
8 questions, and whichever one of you answers, that's fine,
9 and I'll identify who it is for the record, but starting --
10 now I'll go from left to right as I'm looking at you, so
11 will you state your name and business address, sir?
12 MR. WATANABE: I'm Herbert Watanabe,
13 Liliuokalani Building.
14 Q. And that is where, sir?
15 MR. WATANABE: In Honolulu, Hawaii.
16 Q. All right. Sir?
17 DR. NAKASHIMA: Mitsugi Nakashima, I
18 have no business address.
19 Q. All right. Your home address then, please?
20 DR. NAKASHIMA: PO Box 612, Kalaheo,
21 Hawaii, 96741.
22 Q. All right. Now, first, Mr. Watanabe, will you
23 state your current position with the Board of Education?
24 MR. WATANABE: I'm currently the
25 chairman of the Board of Education.
Page 7
1 Q. Mr. Nakashima, you formerly were with the Board
2 of Education, you are not now?
3 DR. NAKASHIMA: No, I am not.
4 Q. You were formerly chair from time to time, were
5 you not?
6 DR. NAKASHIMA: Yes, I was.
7 Q. All right. Now, maybe we'll start with
8 Mr. Watanabe. Can you kind of give us your background in
9 terms of education and work experience?
10 MR. WATANABE: I have been an employee
11 of the Department of Education for 40 years. I retired
12 at the end of 1992 and elected to the Board of Education
13 in 1996. I've been reelected for my second term in the
14 year 2000 and I was elected as a chairperson of the board
15 in December of last year.
16 Q. Thank you. Mr. Nakashima?
17 DR. NAKASHIMA: I was with the
18 Department of Education from 1955 to 19 -- beginning of
19 1988 and was elected to the board in '90 -- in '88 and
20 completed my third term at the end of the year 2000.
21 Q. Are you currently employed in any capacity?
22 DR. NAKASHIMA: I -- the only
23 employment I have currently is I serve as a relief
24 administrator in the Kauai District with a few schools.
25 Q. All right. And you mean you service schools in
Page 8
1 the Hawaii District of the Department of Education?
2 DR. NAKASHIMA: In Kauai District, yes,
3 with a couple of schools that I've been contracted to
4 take the place of the principal when he or she is
5 attending a meeting or a workshop or whatever.
6 Q. I see. I see. Now, what I'd like to do is to
7 ask you some questions about the department, the Board of
8 Education's role in the education process in the State of
9 Hawaii. Can one or either of you tell us what the
10 general responsibilities are as to the Board of
11 Education's role?
12 MR. WATANABE: Constitutionally, the
13 board has the responsibility of establishing policies,
14 and also to develop and to hire the State superintendent,
15 who would then manage the system. That has been the
16 latest -- I think the change was made in 1994. There's a
17 constitutional change. Prior to that, there was -- there
18 was an item in the constitution that says we shall also
19 manage the system. That phrase was taken out. We don't
20 have the management right anymore. Basically the two
21 things. One is to hire the superintendent, who will
22 manage the system, and the second is to develop policies
23 for the system.
24 Q. All right. Now, that was Mr. Watanabe
25 speaking. Mr. Watanabe, when you say hire the
Page 9
1 superintendent, would it also include though once the
2 superintendent was hired, to supervise, oversee the
3 superintendent in the carrying out of his duties?
4 MR. WATANABE: That's correct.
5 Q. Now, does the board get financial data from the
6 Department of Education, financial information?
7 MR. WATANABE: Yes.
8 Q. And perhaps you can describe for us generally
9 the type of financial information you receive, reports or
10 what type of information?
11 MR. WATANABE: We start off with the
12 budget development process, both the operating budget as
13 well as the capital improvement budget. It comes to the
14 board for review and approval, both the regular budget as
15 well as the supplementary budget. This is right now
16 being discussed, the supplementary budget to be presented
17 to the legislature for the year 2002. It comes to the
18 board for review and approval and that then goes to the
19 government to become the executive budget. And during
20 the course of the year, we do receive periodically a
21 report from the superintendent of how the money is being
22 spent. This applies to both the State general funded
23 appropriations as well as the Federal funds that are
24 received from the Federal government.
25 Q. Thank you. Now, these reports you receive,
Page 10
1 Mr. Watanabe, are they reports that, for example, tell
2 you how the Department of Education has been actually
3 spending money as opposed to what was budgeted for an
4 item or a category?
5 MR. WATANABE: Yes.
6 Q. So you have the ability with the reports that
7 you are provided during the year to compare what was
8 actually budgeted and what was actually spent in a
9 specific area?
10 MR. WATANABE: Yes.
11 Q. I see. Now, the budgets themselves, whether it
12 be operating or capital improvement, am I to understand
13 then the board, I guess receives a proposal from the
14 Department of Education, reviews it, confers with the
15 department personnel that are involved and then
16 ultimately approve it or not approve it, is that a
17 correct statement?
18 MR. WATANABE: In the operating budget,
19 once it is allocated to the department, we don't -- we
20 don't go into details of approving each item. This
21 becomes then a management responsibility. For example,
22 money is appropriated to us in category A, which is
23 personnel, B is supplies, C is equipment and there's
24 motor vehicle, that's the way it is come to us. It comes
25 up to us in a lump sum amount under those categories. We
Page 11
1 identify all of the money in what we then call the EDN,
2 educational identification, EDN 100 is regular ed, 150
3 special ed, 300 and so forth, so the money comes to us
4 already listed in those areas, EDN 100, 150, 200, 300,
5 400, and then 100 is not -- 100 is the largest amount,
6 because that's just regular education, and there are
7 many, many, many programs that are identified under that.
8 It comes to us that way. We don't look into the details
9 of what goes into each one and how it's used. We do ask
10 for it periodically as to how it is being spent. It
11 doesn't come automatically.
12 Q. I see. So that these large categories then are
13 what actually are given to you from what has been
14 appropriated by the legislature?
15 MR. WATANABE: That's correct.
16 Q. And then you take those large items, and
17 obviously you don't go into it on a line item by line
18 item basis --
19 MR. WATANABE: No.
20 Q. But you do approve it on a broad category
21 basis?
22 MR. WATANABE: That's correct.
23 Q. How about special education now? EDN 150, I
24 think you designated it.
25 MR. WATANABE: That's correct.
Page 12
1 Q. Is that broken down though into items so that
2 if one were to ask you how much was being spent on
3 special ed this year as opposed to regular education, you
4 could -- you could provide that information?
5 MR. WATANABE: We should able to see
6 it, yes.
7 Q. How about in terms -- I'm getting ahead of
8 myself, but the Felix Consent Decree and monies that are --
9 were spent pursuant to that decree, is it broken down
10 even further, EDN 150 broken down even further as to what
11 was spent on Felix as opposed to special education in
12 general?
13 MR. WATANABE: No.
14 Q. That's not a category that you have asked to be
15 broken down?
16 MR. WATANABE: No.
17 Q. Is that correct?
18 MR. WATANABE: No, it's not broken
19 down.
20 Q. Okay. Now, so when we say you are able to get
21 the actual -- actuals versus the budgeted items, or I
22 should say categories, you're talking in a broad sense
23 then, are you not?
24 MR. WATANABE: It is a broad sense.
25 Q. Okay. Now, we've had testimony from a person
Page 13
1 who is appointed the internal auditor for the Department
2 of Education. Are you familiar with him in that
3 category?
4 MR. WATANABE: Yes.
5 Q. As far as that person is concerned, is it your
6 understanding that that person reports to the
7 superintendent or reports to the board?
8 MR. WATANABE: Reports directly to the
9 superintendent.
10 Q. And is that person to your understanding
11 supposed to copy the board in everything it sends to --
12 excuse me --
13 MR. WATANABE: Not necessarily.
14 Q. So that as far as the board is concerned then,
15 they do not consider this internal auditor as someone
16 that does work for the board?
17 MR. WATANABE: He works for the
18 superintendent.
19 Q. All right. And has that -- I'm not suggesting
20 it should have been, but has that issue been debated
21 amongst or discussed amongst the board people --
22 MR. WATANABE: Not really.
23 Q. -- as to whether or not that person ought to
24 really report to the board as opposed to the department
25 head?
Page 14
1 MR. WATANABE: We have discussed this
2 matter several times. The board needs an auditor of its
3 own.
4 Q. I see.
5 MR. WATANABE: In fact, I think we are
6 proposing a legislation to add a staff so we have -- we
7 can -- from the board itself can then look into the
8 system. Right now we depend upon the office of the
9 superintendent to give us a report.
10 Q. And so that if there are any questions that for
11 whatever reason you feel have not been satisfactorily
12 answered --
13 MR. WATANABE: No.
14 Q. -- you have no way of checking that?
15 MR. WATANABE: No.
16 Q. In other words, you only speak essentially to
17 the superintendent then?
18 MR. WATANABE: That's right.
19 Q. Now, and this internal auditor, as far as
20 you're concerned, the way that position has been created
21 and the way it functions, you consider that to be
22 someone, or that position is someone who reports only
23 directly to the superintendent?
24 MR. WATANABE: That's correct.
25 Q. Not to the board at all?
Page 15
1 MR. WATANABE: That's correct. Right.
2 Q. Does the board take the position that if it
3 wanted information from the internal auditor it could
4 seek that information and it should be provided?
5 MR. WATANABE: We are free to ask that
6 question or ask for that service. Whether we get it is
7 another question.
8 Q. I see.
9 MR. WATANABE: We call it an IOU. I
10 mean we would make the request of the superintendent that
11 we'd like to have the report and it becomes an IOU and
12 then we wait for that. I think there is a question right
13 now of a report that the internal auditor from the
14 Department of Education had made. I have not seen that
15 copy.
16 Q. The recent report that was completed this year?
17 MR. WATANABE: That's correct.
18 Q. Oh, I see.
19 MR. WATANABE: I just saw it this
20 morning.
21 Q. Oh, I see.
22 MR. WATANABE: Someone over here gave
23 it to me.
24 Q. I thought I saw a letter of transmittal though.
25 MR. WATANABE: Yeah, it says BOE, but I
Page 16
1 have not seen it.
2 Q. I see. Well, are you -- may I ask,
3 Mr. Watanabe, as far as mail that comes to the board, are
4 you current as of today as to all the mail that's come in
5 the last couple weeks, for example?
6 MR. WATANABE: Yes. I read every
7 E-mail that comes to me, too.
8 Q. Yeah, I understand that, but this was in actual --
9 I believe these are hand delivered or mailed transmittal
10 letters with the BOE in all caps. They're first, I
11 think, among the copy persons.
12 MR. WATANABE: The transmittal, I just
13 got it this morning, at the bottom it says BOE, Board of
14 Education. When these documents come to us from whatever
15 source, the secretary of the board then will stamp on the
16 top the date received and the distribution list. It will
17 come to me first. Then I would always write down who it
18 goes to. And in my case, if it is to the board, I would
19 make -- I will write down BOE members and then the
20 secretary makes sure that every member of the board
21 receives a copy of it.
22 Q. And you had not received such a copy?
23 MR. WATANABE: I have not.
24 Q. And the one you received was someone handed it
25 to you?
Page 17
1 MR. WATANABE: This morning.
2 Q. Now, have there been -- have there been
3 instances in the past, and I would address this to both
4 Mr. Watanabe and Dr. Nakashima, where reports or
5 information have -- has been requested from the
6 department and these reports or information has not been
7 forthcoming?
8 DR. NAKASHIMA: Yes.
9 Q. What type of information, doctor?
10 DR. NAKASHIMA: Well, it would probably
11 have been a request for information, for example,
12 pertinent to the superintendent's annual expectations,
13 and often it was difficult to get the information, for
14 example, the mid year or mid term information as to how
15 the superintendent was doing to meet the expectations.
16 Q. Was an explanation given to you as to why that
17 information was not forthcoming?
18 DR. NAKASHIMA: Just wasn't ready.
19 Q. Oh, I see. How about financial information?
20 Has that been requested, and let's limit it to the last
21 three years. Financial information that has been
22 requested that has not been forthcoming, if you recall?
23 MR. WATANABE: As far as financial
24 report, I'm not too specific right now. We have asked
25 for information in a variety of subject areas including
Page 18
1 financial. The last report that I requested was the
2 detailed report for the result of the PREL contract at
3 issue, the 2.3 million dollars. It came back to me in a
4 very detailed form, we have read it, several of us have
5 read it, we were not satisfied with the results of that
6 money being spent, in other words, 2.3 million, what
7 effect did that particular spending have. The report did
8 come back from the superintendent, but the report in the
9 estimate of several of us who read the report was not
10 detailed enough to give us a full report. Did that money
11 do something to resolve the problems at the schools that
12 the PREL people are supposed to service and the
13 subcontract that was included in that particular
14 contract. It was not satisfactory. I did not respond to
15 the superintendent, kept saying well, I'm still studying
16 that.
17 Q. When was the request for those -- for that
18 information first made, Mr. Watanabe?
19 MR. WATANABE: This last report?
20 Q. Yes.
21 MR. WATANABE: Within the last month.
22 Q. And when was this response received that you
23 felt was unsatisfactory?
24 MR. WATANABE: I think it was dated
25 about September, sometime in September.
Page 19
1 Q. Since we're on the subject, I may be getting
2 ahead of myself, we might as well discuss it. You're
3 talking about the contract that was entered into between
4 the Department of Education and PREL in which Na Laukoa
5 was a required subcontractor to that contractor, right?
6 MR. WATANABE: That's correct.
7 Q. And you gentlemen have knowledge about that
8 contract and the attempted contract even prior to that
9 directly with Na Laukoa, do you not?
10 MR. WATANABE: I think Dr. Nakashima
11 would be more versed on that because it happened during
12 the time he was chair. I was a vice-chair. There were a
13 lot of discussions that went on and I think Dr. Nakashima
14 can give you a better breakdown there.
15 Q. All right, go ahead, doctor.
16 DR. NAKASHIMA: With reference to the --
17 what a contract attempt that preceded the PREL contract,
18 Mr. Bob Golden one day informed the board that he had
19 reviewed requests for a contract with this organization
20 that -- and he reported to me and to Mr. Onouye that he
21 didn't think that the organization would be able to do
22 the job. And subsequent to that, Mr. Golden was taken
23 off review of contracts and the next thing we knew, the
24 contract had been awarded to PREL with inclusion of Na
25 Laukoa, and that contract was not -- was not reviewed by
Page 20
1 the board, nor do I believe it was signed off by the
2 Attorney General simply because it was part of the super
3 powers or extraordinary powers granted to the
4 superintendent.
5 Q. All right. Now, let me go back a little bit.
6 When you were contacted by Mr. Golden, was it his opinion
7 that this group, Na Laukoa, was also not qualified to do
8 the job? When you use the phrase not able to do the job,
9 was it because in his opinion they were not qualified?
10 DR. NAKASHIMA: I don't remember
11 whether he used the term qualified or not, but he said
12 that he had sat in on a meeting in which a presentation
13 was made and that he believed that Na Laukoa could not --
14 would not be able to do the job.
15 Q. Did -- by the way, you mentioned Mr. Onouye.
16 That's your legal counsel sitting behind you, Galen
17 Onouye? Is that who you're referring to?
18 DR. NAKASHIMA: Yes.
19 Q. And now, in the course of this -- or strike
20 that. Did have you a conversation with Mr. Golden about
21 this yourself?
22 DR. NAKASHIMA: Yes.
23 Q. In this conversation with Mr. Golden, did he
24 tell you why he believed this contract was being
25 contemplated, the one directly with Na Laukoa?
Page 21
1 DR. NAKASHIMA: No, he did not give any
2 reason for it. We did see a memorandum he had written to
3 the superintendent detailing why he believed Na Laukoa
4 could not -- would not be the one to do the job.
5 Q. So what, if anything, did the board do about
6 that issue at that point, once he learned from -- or got
7 this information from Mr. Golden?
8 DR. NAKASHIMA: Well, the matter of
9 contracts are not regularly brought to the board. That's
10 the superintendent internal management responsibility.
11 And so we didn't pursue it any further.
12 Q. Am I to understand then, Dr. Nakashima, that no
13 matter what size of contract we're talking about, whether
14 it be $100,000 or 100 million dollars, that as far as the
15 board is concerned, that is a matter for the department
16 to deal with, not the board, even for approval?
17 DR. NAKASHIMA: If it's a contract that
18 goes through the procurement process, then it should be
19 brought to the Board of Education. In matters related to
20 contract using Federal funds, the law is clear that the
21 board is the -- is the body that reviews and provides
22 approval. And to that effect, the board had developed a
23 policy to underline that, but policies are such that
24 people, if they choose not to follow them, they don't
25 follow them.
Page 22
1 Q. Well, am I to understand though that in terms
2 of your function in hiring, and I assume firing the
3 superintendent, that when you oversee his work or her
4 work, that these issues are discussed and brought to the
5 attention of the superintendent if in fact the
6 superintendent has not followed the policies that you
7 have established?
8 DR. NAKASHIMA: Yes.
9 Q. And was this matter discussed then with the
10 superintendent as to his not bringing this matter to your
11 attention, this matter being the contract with PREL in
12 which Na Laukoa was a required subcontractor?
13 DR. NAKASHIMA: I'd like to defer to
14 Mr. --
15 Q. I see.
16 DR. NAKASHIMA: -- Watanabe, because I
17 had already left the board when the last evaluation was
18 done with the superintendent.
19 Q. I see. Before we get there though, did the
20 board learn once Na Laukoa -- excuse me, once PREL and
21 the department entered into a contract, which I believe
22 was in the fall of last year, August or so, did the board
23 learn about that contract subsequently even before the
24 superintendent was evaluated?
25 DR. NAKASHIMA: I remember being told
Page 23
1 that a contract had been consummated, but I did not see a
2 copy of that soon after the contract was signed.
3 Q. The board did get involved though initially
4 with this contract that was being accepted to be let to
5 Na Laukoa directly, that contract, the board did become
6 involved with that, did it not?
7 DR. NAKASHIMA: Involved only to the
8 extent that we were told by Mr. Golden that the contract --
9 at least he thought a contract was being contemplated.
10 But subsequent to a meeting with Mr. Golden, the
11 superintendent expressed his concern that Mr. Golden
12 had -- was insubordinate in bringing the matter to the
13 board. And we -- we went on the basis that it's an
14 internal management responsibility and didn't pursue it
15 any further.
16 Q. I see. Well, you do know that Mr. Golden at
17 your request provided you with correspondence, with memos
18 relating to the Na Laukoa matter?
19 DR. NAKASHIMA: Yes.
20 Q. Right? And do you also know that Mr. Golden
21 sought the permission or at least informed the
22 superintendent that he was doing this, in other words,
23 talking to the board directly?
24 DR. NAKASHIMA: Uh huh.
25 Q. Are you aware of that, also?
Page 24
1 DR. NAKASHIMA: Yes.
2 Q. So that am I to understand despite that, the
3 superintendent expressed displeasure at Mr. Golden
4 discussing the matter with you?
5 DR. NAKASHIMA: Yes.
6 Q. Now, did the board though in any way discuss
7 the matter with the superintendent as to allowing this
8 contract to be let to Na Laukoa?
9 DR. NAKASHIMA: We did not discuss
10 because this was done only between the superintendent and
11 me, with -- I'm quite sure Mr. Onouye was present at that
12 meeting in my office.
13 Q. I see. So you did have a meeting with the
14 superintendent?
15 DR. NAKASHIMA: Because he asked to
16 meet with us and at that meeting Mr. Golden was -- I
17 didn't know he had been sitting outside the office at the
18 request of the superintendent.
19 Q. He was never called in?
20 DR. NAKASHIMA: No. He was not.
21 Q. Now, did the superintendent then explain to you
22 why he was contemplating this contract with Na Laukoa?
23 DR. NAKASHIMA: No, that discussion
24 never occurred. Well, the only thing is he -- he did say
25 was that despite Mr. Golden's evaluation that Na Laukoa
Page 25
1 did not -- was not qualified or did -- could not -- that
2 he and some of his staff people had reviewed the
3 qualifications and that they, the committee, felt that Na
4 Laukoa couldn't, so I did ask him who served on the
5 committee to evaluate that, and he said he had served on
6 it and I believe Mrs. Hamamoto had sat in on it and Doug
7 Houck, and I'm not too sure who the other party was.
8 Q. I see. But he described that as an actual
9 committee that was created to evaluate the Na Laukoa
10 contract?
11 DR. NAKASHIMA: Well, I guess he said --
12 the only thing he said was that despite Mr. Golden's
13 evaluation, that Na Laukoa did not qualify, that this
14 committee in fact believed that Na Laukoa did.
15 Q. Well, let me ask you this, doctor. There's --
16 and I make a distinction between the one issue of Na
17 Laukoa being qualified or not. That's one area, one
18 issue. Another issue is that Na Laukoa, despite the fact
19 that it's not qualified, that there might be other
20 reasons why Na Laukoa would be involved with this
21 contract. You understand the distinction I'm making?
22 DR. NAKASHIMA: Uh huh. Uh huh.
23 Q. Is it clear to you that the discussion you had
24 with the superintendent had to do with Na Laukoa being
25 qualified to do the contract or not, not the other area?
Page 26
1 In other words, even though they're not qualified, I'd
2 like to give them the contract for other important
3 reasons, good reasons?
4 DR. NAKASHIMA: No. The only -- he
5 said that in effect to me and Mr. Onouye, who was
6 present, that according to the committee that reviewed
7 it, reviewed the qualifications, that Na Laukoa did
8 qualify so --
9 Q. And we're talking about a fairly technical
10 service that was being sought to be provided, what they
11 call targeted technical assistance, right?
12 DR. NAKASHIMA: Uh huh.
13 Q. And you knew what that was, of course, because
14 of your background? The explanation of it anyway, once
15 they explained it, you understood that whoever would be
16 contracted to do the job would be working with
17 administrators, staff, faculty, people of that level, not
18 necessarily directly with students?
19 DR. NAKASHIMA: Right.
20 Q. So you understood that generally the
21 requirements of the people who would be providing that
22 service, is that correct?
23 DR. NAKASHIMA: Uh huh.
24 Q. In your mind then, the superintendent was
25 explaining to you that this group, Na Laukoa, was
Page 27
1 competent and qualified to do that technical -- targeted
2 technical assistance?
3 DR. NAKASHIMA: Uh huh.
4 Q. Yes?
5 DR. NAKASHIMA: Yes.
6 Q. All right. Did anyone question him about that,
7 that matter as to whether they were qualified or not?
8 DR. NAKASHIMA: No. Not -- as far as I
9 know of, no board member questioned him on that.
10 Q. All right. Now, you did learn later though
11 that the contract was entered into now with PREL in which
12 as I already said, Na Laukoa was a required
13 subcontractor.
14 DR. NAKASHIMA: Uh huh.
15 Q. Is that correct?
16 DR. NAKASHIMA: Yes.
17 Q. Now, was the board aware that the
18 superintendent used impact funds, impact aid funds to
19 fund that contract?
20 DR. NAKASHIMA: That came out
21 subsequently. Yes.
22 Q. Now, if in fact it was funded, this contract
23 with PREL was funded by excess -- I should say impact aid
24 funds, should it not have come to the board for approval
25 before it was actually entered into?
Page 28
1 DR. NAKASHIMA: Well, I guess some of
2 us thought it should have, but what the -- what was
3 represented to the board, at least to me, was that this
4 was part of the superintendent's broad powers granted by
5 the Judge Ezra for him to do whatever was necessary to
6 meet the consent decree requirements.
7 Q. I see. And do you recall who explained that to
8 you?
9 DR. NAKASHIMA: I don't remember that.
10 Q. Someone from the department, obviously?
11 Department of Education, obviously?
12 DR. NAKASHIMA: No. Not necessarily.
13 I think this came about as a discussion among a number of
14 us, and I don't remember who, generally who was involved
15 in that, but it -- some of it was just assumption and
16 logical, supposedly logical conclusion.
17 Q. Well, it was clear to you as a member of the
18 board for the years that you were there that the
19 superintendent at that time was aware of this
20 requirement, that if a contract was to be funded with
21 Federal funds, that it had to come to the board for some --
22 for approval before the contract was entered into, is
23 that a fair statement?
24 DR. NAKASHIMA: Yes.
25 Q. So that as far as you're concerned then, this
Page 29
1 is -- conclusion that was reached, you don't know who --
2 how you obtained that information, but it was concluded
3 by the Board of Education that the superintendent was
4 utilizing these, as you call them, super powers granted
5 to the -- I should say ordered that the superintendent
6 would have, he used those super powers to enter into this
7 contract with PREL and therefore never brought it before
8 the board?
9 DR. NAKASHIMA: Yes.
10 Q. Now, once the board became aware of it
11 subsequently, did it then discuss that contract with the
12 superintendent?
13 DR. NAKASHIMA: No, we did not.
14 Q. And was there any reason why not?
15 DR. NAKASHIMA: We assumed that it was
16 a done deal and in informal discussions with the Attorney
17 General's office, it was -- I guess one of the questions
18 is why the Attorney General's office had not reviewed
19 that PREL contract, and it was our understanding that the
20 interpretation was the superintendent had the right to
21 invoke his so-called super powers.
22 Q. So you became aware, doctor, that the contract
23 with PREL had a line for approval by the -- at least as
24 to form --
25 DR. NAKASHIMA: Yes.
Page 30
1 Q. -- by the Department of the Attorney General,
2 and that line was blank suggesting that there was no such
3 approval had, is that correct?
4 DR. NAKASHIMA: Yes.
5 Q. Now, so that in terms of contracts with
6 third-party vendors and the DOE for groups such as -- I
7 think you've heard the name of an organization called
8 Columbus Educational Services, another one called
9 Educational Placement Services, huge contracts?
10 DR. NAKASHIMA: Uh huh.
11 Q. Initially with Columbus in the amount of 100
12 million dollars. So those kinds of contracts, because
13 they come through -- I guess we would say the regular
14 procurement process and the super powers, I guess, that
15 they would never come to you for approval.
16 DR. NAKASHIMA: The Columbus contract
17 was only known to the board as -- because it was -- it
18 was discussed -- it was almost like a rumor that this
19 huge contract was being let out, that it was part of the
20 consent decree to expedite the location and hiring of
21 special ed qualified teachers.
22 Q. Was that matter then discussed with the
23 superintendent relating to Columbus, I mean, that's
24 rumor?
25 DR. NAKASHIMA: Well, let me say some
Page 31
1 of the things that were within that were part of the
2 E-mail system in which you could -- and one of the things
3 was said was that, for example, Mr. Yoshii was assigned
4 to review contracts, and that was one of the contracts he
5 reviewed. And subsequently, he was removed from
6 reviewing those kinds of contracts, so whatever mechanism
7 was there didn't produce the information that might have
8 been useful for the board.
9 Q. I see. Now, the category of EDN 150 that we
10 talked about earlier, the special education budget
11 category, you are aware that there was approximately 12
12 million dollars in unspent emergency funds as of March 31
13 of this year based upon the internal auditor's
14 investigation and report?
15 MR. WATANABE: Yes.
16 Q. Were you aware of that, sir?
17 MR. WATANABE: Yes. That report was --
18 it appears in this report by Mr. Koyama, but the
19 superintendent did submit to us a report about a month
20 and a half ago outlining a request sent to the governor
21 to shift funds from EDN 100 to 150 and that was denied,
22 and in their report it showed the amount that was to
23 lapse. We raised concern about that, how come you
24 lapsing this money, lapsing means gone, turned back to
25 the general fund. That's the first time we heard about
Page 32
1 it, a month ago. We had two figures. The figure that
2 came to us, the first figure was 8.3 million, and then
3 the last report was twelve, of which 8.3 was 150. The
4 other amount that we're concerned about is another couple
5 of million dollars, I guess was EDN 400. The reason why
6 that stuck out in our minds was that we're facing a
7 shortage of about two million dollars in student
8 transportation. But why then you have a two million
9 dollar surplus, so lapsing -- I think the discussion
10 there centered around the savings incurred as a result of
11 the strike. So right now we're still faced with two
12 million dollars possible deficit in student
13 transportation. But that money is gone. That's the year --
14 the previous fiscal year which ended June 30.
15 Q. That's fiscal '01, I think?
16 MR. WATANABE: '01. Right.
17 Q. EDN 400 is what, sir?
18 MR. WATANABE: That's in transportation --
19 Q. That's all right. That's all right.
20 MR. WATANABE: Anyway -- so that I
21 think the adult ed is in there, also, transportation.
22 Q. I see. That -- you said there was a letter
23 sent from the superintendent to the governor.
24 MR. WATANABE: Requesting for that and
25 were denied.
Page 33
1 Q. I see. You seem to be looking at something.
2 Do you have copy of that letter with you?
3 MR. WATANABE: No, we don't have it
4 here with us.
5 Q. All right. And how much was being requested to
6 be shifted so that it would not revert to the general
7 fund?
8 MR. WATANABE: I think the total came
9 out to twelve.
10 Q. Twelve million. I see. Of which 8.3 was EDN
11 150 money?
12 MR. WATANABE: Right.
13 Q. All right. And so was this ever explored by
14 the board as to why -- well, strike that. Is it your
15 understanding, gentlemen, that when emergency funds are
16 requested, that they're being requested because monies
17 have already been spent?
18 MR. WATANABE: We had unusual term in
19 all the years I worked, as I understand the word deficit,
20 you don't have the money, you are in arrears, you don't
21 have the money, never heard this thing called forward
22 funding. Forward funding, as I understood in the
23 description given to us, was the money that you spend or
24 you're going to get it from special appropriation,
25 emergency appropriation. And I recall appearing before
Page 34
1 both the leadership of the House and the Senate and I see
2 a couple of people here that were at the meeting where we
3 asked for emergency funding to take care of the so-called
4 called forward funding. And the figures changed when we
5 appeared before the House leadership, one figure we had,
6 and we had another figure before the Senate leadership,
7 and the reason that the figures changed as reported to us
8 by the superintendent is that from month to month, if you
9 don't hire the number of people you wanted to hire, then
10 the next month you have less. That's the reason why when
11 we appeared before one group it was one figure, when we
12 appeared before another group it came down by another
13 figure. That was the reason that was given to us by the
14 State superintendent at that time. And I believe at the
15 end of it, before the session ended and there was a lot
16 of debate by both houses whether to give it to us or not,
17 I think it came down to something like 24, 25 million
18 that was the forward funding.
19 Q. I see.
20 MR. WATANABE: In other words, the
21 money was spent, we need the money to pay for it. I
22 know, I remember reading the question if we did not get
23 the money from the House, from the legislature, how are
24 we going to cover this? Our concern was it would come
25 from EDN 100 which will affect the schools. Of course,
Page 35
1 the generosity was there by the legislature, they gave it
2 to us and so we didn't have to tap the money that would
3 have gone to the schools.
4 Q. Of course, the amount that was requested, and
5 again, this information about these figures that were
6 presented to the legislature, were presented to you, the
7 board, by the department, right?
8 MR. WATANABE: That's correct.
9 Q. So that you accepted that, whatever numbers,
10 figures they gave you?
11 MR. WATANABE: That's correct.
12 Q. And then brought it --
13 MR. WATANABE: That's correct.
14 Q. -- to the legislature in accordance with your
15 obligation --
16 MR. WATANABE: That's correct.
17 Q. -- to try and obtain that appropriation?
18 MR. WATANABE: Yes.
19 Q. Nonetheless though, those numbers significantly
20 decreased as time went on?
21 MR. WATANABE: That's correct.
22 Q. Did they not? And the explanation was given to
23 you about forward funding or the fact that the monies had
24 to be incumbered perhaps? I didn't quite understand what
25 was explained to you.
Page 36
1 MR. WATANABE: The example would be,
2 for example, the Columbus contract. If they had hoped to
3 hire 100 teachers, instead of hiring 100 teachers they
4 could only find 50, so you save money.
5 Q. I see.
6 MR. WATANABE: So the next month you
7 have less, that's --
8 Q. I see.
9 MR. WATANABE: That's the scenario that
10 was presented to us.
11 Q. I see what you're saying, but nonetheless
12 though, if in fact the definition of emergency
13 appropriations or even forward funding were to be used,
14 in other words, money that had already been spent then in
15 fact what was being requested from the department or by
16 the department was not in fact those funds because they
17 had not spent them yet? Because those funds -- well, I
18 guess decreased substantially because Columbus didn't
19 hire the number of teachers that they committed to hire,
20 am I correct?
21 MR. WATANABE: Yes.
22 Q. So that in essence then, the monies that were
23 being requested by the department were in fact not
24 emergency funds, right?
25 MR. WATANABE: Well, you had already
Page 37
1 spent the money. You had to pay for it and you're asking
2 them -- you're asking the legislature for emergency
3 funding to sort of cover the money you already spent.
4 That's why I was confused, because I knew what it meant
5 to say deficit spending, you're spending money you don't
6 have.
7 Q. Right.
8 MR. WATANABE: You're paying for
9 something from somewhere. That was never explained to us
10 where it came from.
11 Q. Where that somewhere was?
12 MR. WATANABE: Yeah.
13 Q. All right.
14 MR. WATANABE: So when the money came
15 back to us after the appropriation was made for the
16 emergency funding, where it went I don't know.
17 Q. Well, but what you do know though nonetheless
18 is that at a period in March of 2001 and even later, more
19 recently, there were funds that had not been spent that
20 had been appropriated by the legislature?
21 MR. WATANABE: According to the report
22 by the auditor, yes.
23 Q. Well, also according to the department memo or
24 letter that you saw, the department was trying to shift
25 those funds somewhere else so that it would not lapse
Page 38
1 through the general fund?
2 MR. WATANABE: That was for the
3 previous fiscal year, yes.
4 Q. Oh, I see. Then those funds. I see. Well,
5 certainly the emergency funds, according to the internal
6 audit as of March 31, 2001 had not been spent yet?
7 MR. WATANABE: Yes.
8 Q. And in accordance with your understanding as to
9 how these funds were to be spent and what they meant,
10 that it should have been spent long before then, am I
11 correct?
12 MR. WATANABE: We have not received any
13 report so far as to how the emergency funding money has
14 been spent to this date.
15 Q. Have you asked for it, sir?
16 MR. WATANABE: No, we have not.
17 Q. Do you intend to ask for that?
18 MR. WATANABE: Yes.
19 Q. And that wouldn't come to you through a normal
20 report that you would receive from the department? A
21 regular report, I should say?
22 MR. WATANABE: It is a desirable action
23 but we have not yet pursued that.
24 Q. All right. You have asked for it though?
25 MR. WATANABE: Yes.
Page 39
1 Q. Now, did the board have any input into what
2 ultimately, and maybe both of you are not here, but
3 ultimately ended up being the Felix Consent Decree?
4 MR. WATANABE: Repeat that?
5 Q. Yeah. Did the board have any involvement with
6 what ultimately ended up being the Felix Consent Decree?
7 DR. NAKASHIMA: Not to my knowledge.
8 No, not while I was on the Board of Education, no.
9 Q. When did you first come onto the board, doctor?
10 DR. NAKASHIMA: 1988.
11 Q. My understanding of the Felix Consent Decree
12 itself, I think it was entered into 1994?
13 DR. NAKASHIMA: Yes.
14 Q. But the board was not involved with that
15 process?
16 DR. NAKASHIMA: No.
17 Q. How about the matter of whether or not there
18 was compliance with the decree as time went on, was the
19 board involved with any aspect of that?
20 DR. NAKASHIMA: The board was involved
21 in several ways. Number one, the so-called special
22 programs committee, subcommittee of the board,
23 responsibility was to monitor progress in the area of
24 special education, special services or other special
25 programs. And there are minutes available as to what
Page 40
1 reports they received and so forth and so on. For
2 example, I remember one in which Dr. Groves was asked to
3 come and explain what he was doing with special
4 education. The other area we had put in for the
5 superintendent, one of the expectations was that he meet
6 the requirements of the Felix Consent Decree.
7 Q. I see.
8 MR. NAKASHIMA: At least show progress
9 toward meeting the requirements.
10 Q. Were such progress reports made regularly to
11 the board?
12 DR. NAKASHIMA: No. It's only in terms
13 of whether or not the committee, special programs
14 committee heard any report to that in that regard.
15 Q. Do you know if regular reports, written reports
16 were submitted to the special programs committee?
17 DR. NAKASHIMA: I believe most of them
18 were verbal reports with -- supplemented by some
19 information that transmitted to the committee.
20 Q. I see. Now, I had mentioned earlier the term
21 targeted technical assistance fund. Targeted technical
22 assistance. Are you aware that a bill in the amount of --
23 a statement in the amount of $575,950 for the court
24 monitor was included in the 2001 emergency request to
25 fulfill the Felix response plan? Were you aware of that?
Page 41
1 Those types of bills would not come before the board?
2 MR. WATANABE: No.
3 Q. I should say those types of items would not
4 come before the board?
5 MR. WATANABE: No.
6 Q. You're shaking your head no, Mr. Watanabe.
7 MR. WATANABE: No, never seen that.
8 Q. All right. And as far as the court monitor was
9 concerned, would the board be involved in any fashion in
10 terms of reviewing expenditures by the court monitor's
11 office, things of that nature?
12 MR. WATANABE: No.
13 Q. Not at all?
14 MR. WATANABE: Not at all.
15 Q. How about there was a group that was termed the
16 technical assistance panel that was established, I
17 believe, to assist in complying with the consent decree,
18 which panel I understand was disbanded by the end of last
19 year, December 2000. Are you aware of that panel, what
20 it was?
21 MR. WATANABE: No.
22 DR. NAKASHIMA: Only what I read,
23 description of that was part of the 1998 implementation
24 plan.
25 Q. So that reports regarding what that panel was,
Page 42
1 what it did, how it was constituted, things of that
2 nature were never brought before the Board of Education?
3 DR. NAKASHIMA: Not as far as I know.
4 Q. Okay. Neither before the special programs
5 committee to your knowledge?
6 DR. NAKASHIMA: I'd have to go back, I
7 think we'd have to go back and check the minutes to find
8 out whether or not there was any specific reference to
9 that.
10 Q. Okay. Can we take a break? I'm almost done,
11 that's why, I want to look at my notes.
12 CO-CHAIR SENATOR HANABUSA: Members,
13 we'll be taking a short, five minute recess at this time,
14 so we'll reconvene at 10:10. Thank you.
15 (Recess.)
16 CO-CHAIR REPRESENTATIVE SAIKI:
17 Members, we'll reconvene our committee hearing and we'll
18 proceed with questioning of our two witnesses.
19 SPECIAL COUNSEL KAWASHIMA: Thank you,
20 Chair Saiki.
21 Q. One other area, gentlemen, I wanted to ask you
22 about, and that had to do with the contract ultimately
23 that was entered into between the department and PREL, a
24 requirement of which contract was that Na Laukoa be
25 subcontracted with. Ultimately at some point in time
Page 43
1 that the then superintendent's position as a member of
2 the board of directors of PREL became an issue, did it
3 not?
4 MR. WATANABE: In April of this year,
5 2001, I received a letter from the superintendent, at
6 that time Dr. LeMahieu, asking that the board direct him
7 to be a member of the board of directors of PREL. That
8 was in April. I brought the letter to the attention of
9 the board. In that letter, he, Dr. LeMahieu, attached a
10 number of documents that alluded to the fact that to be a
11 member of PREL is not --
12 Q. A conflict of interest?
13 MR. WATANABE: Conflict of interest.
14 The board took into consideration all of the documents
15 and made one -- it took action and asked the
16 superintendent to resign from PREL. That was in April,
17 April letter. That action was taken in May. I
18 approached the superintendent and talked to him
19 personally, I said I'm sorry to inform you that the board
20 asks that you resign. He subsequently did resign from
21 PREL.
22 Q. So that resignation was prompted by a direction
23 from the board?
24 MR. WATANABE: A directive from the
25 board, yes.
Page 44
1 Q. And what prompted that directive was a request
2 from the superintendent that he be directed by the board
3 to become a member?
4 MR. WATANABE: Correct.
5 Q. Made a member of the Board of Education?
6 MR. WATANABE: Of PREL.
7 Q. Board of PREL? I'm sorry.
8 MR. WATANABE: Yes.
9 Q. Now, were you aware he had been a member of the
10 board of PREL for a substantial period of time before
11 that?
12 MR. WATANABE: Well, I wasn't made
13 aware of that. This whole question about the contract
14 with PREL came to my attention when I became chair. One
15 of the previous board members showed me the contract.
16 The contract itself was never presented to the board. As
17 I reviewed the contract itself, what caught my attention
18 is on the first page of the contract in which the
19 superintendent had indicated, at that time, Dr. LeMahieu,
20 that the funding was, one, impact aid money, 2.3 --
21 2,328,611, and it's indicated that the stipulation issued
22 on June 28, 2000 by the US District Court authorizing the
23 Department of Education to waive requirements of Chapter
24 1030 Hawaii Revised Statutes and 103F Hawaii Revised
25 Statute 1030 to comply with the Felix Cayetano Decree, in
Page 45
1 other words, the super power granted to him by the court
2 and it indicated the source of funds being impact aid.
3 That's the only time I saw the contract.
4 Q. I see. So you had not -- you had not been made
5 aware of the fact that the superintendent was a member of
6 the board of directors of PREL?
7 MR. WATANABE: No, not at the time.
8 Q. Or by that time already?
9 MR. WATANABE: Since then, the board
10 asked that he submit to us a list of all other
11 organizations that he is a member of as a director or
12 otherwise, and that he complied with.
13 Q. I understand though that the board had a
14 meeting with the superintendent back in October of 2000
15 relating to this PREL contract. Am I not correct?
16 MR. WATANABE: I was not aware of that.
17 DR. NAKASHIMA: No.
18 Q. Mr. Nakashima?
19 DR. NAKASHIMA: We did not have a
20 meeting with him.
21 Q. Was there a discussion though after Mr. Golden
22 brought these complaints to your attention back in 2000
23 about the contract, first of all, Na Laukoa, was there
24 not a discussion that the board had or at least you had,
25 Dr. Nakashima, with the superintendent about Na Laukoa
Page 46
1 and PREL? Or maybe just Na Laukoa?
2 DR. NAKASHIMA: We did not have the
3 discussion.
4 Q. All right. You did not have -- well, I think
5 you testified earlier that you had a discussion though?
6 DR. NAKASHIMA: I did have a discussion
7 with the superintendent at his request because he felt
8 that Mr. Golden's evaluation of that contract was flawed.
9 Q. I see. I see.
10 DR. NAKASHIMA: And that in fact, as I
11 said earlier, he had cited the committee that had
12 reviewed it in fact, had thought that that organization
13 was qualified.
14 Q. You know, we had -- I don't have it here, we
15 have documents to suggest that the time line was
16 presented to you by Mr. Golden that had, you know, the
17 events, dates and events that took place, but that this
18 was given to you on or around October of last year. Does
19 that sound familiar to you?
20 DR. NAKASHIMA: No. I did not see
21 that.
22 Q. All right. So you don't recall in any of your
23 discussions with -- well, strike that. In that
24 discussion you had then with the superintendent in which
25 he was trying to convince you that Na Laukoa was in fact
Page 47
1 qualified to handle that contract for targeted technical
2 assistance, was the issue of PREL and the fact that he
3 was on the board ever brought up?
4 DR. NAKASHIMA: No, it was not.
5 Q. So you never had any discussion then with the
6 superintendent about PREL though?
7 DR. NAKASHIMA: No.
8 Q. Until it came up in April of this year, you
9 weren't involved with that?
10 DR. NAKASHIMA: No.
11 Q. Okay. All right. As far as -- Mr. Watanabe,
12 the documents that were presented to the Board of
13 Education to support the superintendent's opinion that he
14 would not be in a conflict of interest by continuing to
15 serve as a member of the board of PREL, are you at
16 liberty to tell us what those documents were?
17 MR. WATANABE: One is called the
18 Advisory Opinion number 86-1. It is a three page
19 advisory from the State Ethics Commission dated January
20 31, 1986. The chairman of that commission at that time
21 was Tim Farr. Another was a letter to Dr. LeMahieu from
22 John Kofal, president and CEO of Pacific Resources
23 Educational and Learning, that's PREL.
24 Q. Right.
25 MR. WATANABE: Those are the two
Page 48
1 documents that are attached to the letter that's sent to
2 me by Dr. LeMahieu.
3 Q. Would you provide copies of -- allow the
4 committee to copy that?
5 MR. WATANABE: Yes, I can do that.
6 Q. All right. Before you leave, we'll accept a
7 copy from you, sir. And that letter from PREL,
8 Mr. Kofal, in a conclusory fashion I assume concluded
9 that there was not a conflict?
10 MR. WATANABE: No.
11 Q. Is that correct?
12 MR. WATANABE: Yes.
13 Q. All right. We'll accept a copy after we're
14 done here, sir. Thank you. Now, in considering whether
15 or not the superintendent should remain as a member of
16 the board of PREL, were there any actual discussions with
17 the superintendent himself directly?
18 MR. WATANABE: No.
19 Q. So that was the board at that time aware that
20 the contract with PREL in terms of how it was negotiated
21 on the side of the Department of Education, the person
22 who negotiated had direct contact or direct negotiations
23 with PREL for that contract in the amount of 2.3 million
24 dollars, that person who did it was the superintendent,
25 Dr. LeMahieu?
Page 49
1 MR. WATANABE: I brought it to the
2 attention of the board at the time when the request to be
3 a member of the PREL board of directors -- I brought it
4 to the attention to the board, the contract itself, which
5 as I said to you earlier was brought to my attention
6 after I became chair. I was curious as to what this
7 contract was all about. I heard about it, but never saw
8 it, it was never brought to the board for approval
9 because of the super powers granted to the
10 superintendent, and so the board looked at the contract
11 itself and said they were concerned that there may be
12 conflict, so the board says no, have the superintendent
13 resign from PREL.
14 Q. I see. I see. All right, thank you,
15 gentlemen. I have no further questions.
16 CO-CHAIR REPRESENTATIVE SAIKI: Thank
17 you very much. Members, we will proceed with questioning
18 by members. We will adhere to our five minute rule.
19 We'll begin with Vice-Chair Oshiro followed by Vice-Chair
20 Kokubun.
21 VICE-CHAIR REPRESENTATIVE OSHIRO:
22 Thank you, Co-Chair Saiki.
23 BY VICE-CHAIR REPRESENTATIVE OSHIRO:
24 Q. Mr. Watanabe, I think in the beginning when
25 Mr. Kawashima was asking you questions about the role of
Page 50
1 the Board of Education, you had stated something to the
2 effect that there are times when the board receives
3 financial info such as the budgets and the operations and
4 the CIP. What, if anything, does the board do once it
5 receives such information?
6 MR. WATANABE: These budget items are
7 brought to the board. First it comes to the board
8 committee on budget and accountability. We review that
9 carefully. We do have people from the department,
10 various divisions that come to us to indicate -- justify
11 the requests. Our concern is simply that there is a
12 reason for all of these requests, not just figures on the
13 piece of paper.
14 Q. So as you understand it, the board does have a
15 rule then in terms of actually approving part of the
16 budget that comes before you in terms of making sure that
17 there's justification and a basis for the request or the
18 figures?
19 MR. WATANABE: That's right. It's not
20 just the departmental request, but it is the board's
21 request. It's the board's action that goes to the
22 governor.
23 Q. Okay. And I'd also like to get clarification
24 on the situation I think having to do with the emergency
25 funding. I think you had stated that I guess based on
Page 51
1 the figures and information that was provided to you from
2 the superintendent and the department, that you folks
3 came to the legislature asking for emergency funding last
4 session, is that correct?
5 MR. WATANABE: That's correct.
6 Q. Okay. And I recall that there were two figures
7 being floated around when it came to the emergency
8 funding request. One was about 41 million and one was
9 about 27 million.
10 MR. WATANABE: Yes, sir.
11 Q. Do you have any -- can you provide any
12 clarification on that?
13 MR. WATANABE: The first 44 million was
14 the earlier figure. Then it dropped. And I can explain
15 the reason why that we were told it dropped is that in
16 the hiring of personnel, that the goals were not reached.
17 In other words, we're looking for -- using a figure, I'm
18 not -- right now I don't know exact figure, say we wanted
19 135 people being hired, we couldn't find that many
20 people, and so by the time we came to the next month, the
21 figures dropped. So the amount then deferred. You have
22 44 million, I think the next figure that I remember was
23 somewhere in the 30 million dollars, 30 million plus.
24 And I think the third figure dropped further.
25 Q. Okay.
Page 52
1 MR. WATANABE: I think the final
2 approval was somewhere around 24 million.
3 Q. And around this time do you recall was this
4 around the period when there were -- I guess threats by
5 Judge Ezra being floated around that the legislature had
6 to essentially provide this appropriation? Is that about
7 the same time that all of this happened?
8 MR. WATANABE: All of that was
9 happening about the same time. I think that was
10 somewhere near the end of the session.
11 Q. Okay. And in the end, as you stated, I think
12 the legislature did approve about 27 million dollars?
13 MR. WATANABE: About.
14 Q. For the emergency appropriation, is that
15 correct?
16 MR. WATANABE: Yes. Yes.
17 Q. Okay. Now, can you explain to me or provide
18 any clarification in terms of this emergency funding that
19 we did provide, how does that relate to the surplus that
20 the department had at the end of this year, as you've
21 earlier stated, being around 12 million dollars and 8.3
22 million being under EDN 150?
23 MR. WATANABE: That surplus figure did
24 not come to us until recently, way after the session
25 ended. You ended the session in May. We didn't get that
Page 53
1 figure of that surplus or so-called lapsing money until
2 last month, September.
3 Q. Okay. And in terms of I guess how that surplus
4 is broken down or the information in terms of how it
5 relates to emergency funding, that still hasn't been
6 provided to you, that information or that justification?
7 MR. WATANABE: We have only the general
8 figure of 12 plus million. The other's for the fiscal
9 year ending June 30, the FY01.
10 Q. I'd also like to ask you, I think you also
11 talked about -- about last month, sometime last month you
12 made a request to the superintendent to get a further
13 breakdown of services in terms of the PREL contract to
14 determine whether the 2.3 million dollars of Federal
15 impact aid actually did assist the schools in reaching
16 compliance, is that correct?
17 MR. WATANABE: That's correct.
18 Q. And what kind of info, if any, you said it was
19 insufficient, is that correct?
20 MR. WATANABE: Well, it was a
21 substantial document. A lot of that was like how much
22 was paid out, details of the purchase order issued, that
23 type of thing. And then there was some report, some
24 information about what Na Laukoa did, but what we did not
25 see is did the money that was spent for a particular
Page 54
1 complex, was the money used, what did it do in terms of
2 the services rendered to a particular complex. Now, in
3 the original contract with PREL, the subcontractor, Na
4 Laukoa, they listed the different complexes that were to
5 be serviced. We did not see the correlation between the
6 services that were supposed to be presented, to be done
7 to this complex and the result of that service. Now, the
8 report indicated that X -- I don't recall the exact
9 number, but a number of those complexes did pass. I --
10 what I didn't see is what happened to the others that did
11 not pass, how close were they to passing the --
12 DR. NAKASHIMA: Service testing.
13 Service testing. Service testing.
14 MR. WATANABE: Service testing. I
15 didn't see that. We're still studying that. I have not
16 responded to the superintendent to ask him for the
17 information, but number one is that we did get a report
18 back. Much of the report was information about the
19 purchase order issue, how much was issued and so forth.
20 In the end, my understanding is that of the 2.3 million,
21 all of that was not utilized, that the follow up
22 contracts I think may have been issued. Again, I have
23 not -- I have not delved into.
24 Q. Thank you very much. Thank you.
25 CO-CHAIR REPRESENTATIVE SAIKI: Thank
Page 55
1 you. Vice-Chair Kokubun followed by Representative Ito.
2 VICE-CHAIR SENATOR KOKUBUN: Thank you,
3 Co-Chair Saiki.
4 BY VICE-CHAIR SENATOR KOKUBUN:
5 Q. Dr. Nakashima, I wanted to just ask you for
6 some clarification about the board's role with respect to
7 the Felix Consent Decree, and you mentioned that I think
8 that with respect to the expectations that the board had
9 or the goals that they set for the superintendent in
10 terms of dealing with the consent decree, you asked for
11 reports regarding progress and how they're reaching
12 compliance.
13 DR. NAKASHIMA: Uh huh.
14 Q. But there were other than what Mr. Watanabe was
15 just indicating about the PREL contract in particular,
16 were there any other areas that the board specifically
17 requested reports from the department regarding
18 compliance?
19 DR. NAKASHIMA: With the consent
20 decree?
21 Q. Yes.
22 DR. NAKASHIMA: Only if the special
23 programs committee had requested information with respect
24 to how the consent decree requirements were being met.
25 That was the only monitoring that was done that was
Page 56
1 specific to that.
2 Q. So at this current time, Mr. Watanabe, are
3 reports being submitted to you in terms of how schools
4 are meeting compliance, what schools' needs, perhaps what
5 results are of the service testing for the various
6 complexes, is that kind of information given to you?
7 MR. WATANABE: Yes. We have been
8 provided those reports from time to time. I have not
9 received the latest report. I've been called by the
10 media yesterday to say how are we doing. I did talk to
11 interim superintendent about this and she indicated to me
12 that we will meet -- we will meet the court requirements
13 as of November the 1st. I did talk to one reporter and
14 that reporter said -- that reporter did talk to the judge
15 and it appears that we will probably not have a -- what
16 do you call that?
17 DR. NAKASHIMA: Receiver.
18 MR. WATANABE: Receiver, so we'd like
19 to meet the court's requirement for the November 1.
20 Q. Well, that's certainly good news and
21 congratulate the department.
22 MR. WATANABE: All of us, we're very
23 happy about that.
24 Q. How about with respect to ISPED, the data
25 system for special ed, are you -- is the board kept up to
Page 57
1 speed in terms of what -- how that's being accomplished?
2 That was one of the major points.
3 MR. WATANABE: Yeah. We had indicated
4 our concern for that. The auditor has expressed her
5 concern about that and we are looking into that. And my
6 understanding is that we are proceeding on that to meet
7 the requirements.
8 Q. But in terms of regular reports on the progress
9 of ISPED?
10 MR. WATANABE: I have not seen any
11 reports so far.
12 Q. I also wanted to ask about the Federal funding.
13 And I guess it's a policy of the board that any time
14 there's the use of Federal funds that it's the approval
15 must come through the board.
16 MR. WATANABE: Yes. My understanding
17 is that the State Board of Education is what they call in
18 the Federal term, we are the Local Educational Authority,
19 LEA. We do have a policy. In the case of spending
20 money, Federal money, as in the case of the PREL contract
21 impact aid, it should have come to the board, however,
22 the superintendent, previous superintendent used the
23 powers granted to him by the court, the super powers to --
24 so he never came to the board for approval or review.
25 Q. But neither did you get an opinion from the
Page 58
1 Attorney General --
2 MR. WATANABE: The opinion --
3 Q. Stipulating --
4 MR. WATANABE: In a nice way, that is
5 not our -- hands off.
6 Q. But that was really just in terms of them not
7 signing off on the form of the contract, wasn't it? Was
8 there a specific advisory opinion that said --
9 MR. WATANABE: Advisory opinion in
10 writing.
11 Q. There is?
12 MR. WATANABE: Yes.
13 Q. Okay. Thank you. Are you aware of other than
14 impact aid Federal funds, are there any other Federal
15 funds that are being utilized by the department, title
16 four, for instance?
17 MR. WATANABE: I believe there are, but
18 I haven't seen that. That also the super power used to
19 bypass the board.
20 Q. There was previous discussion earlier with
21 other witnesses about this Felix Development and Training
22 Institute, which was a partnership, I guess, between the
23 DOE and the Department of Health, and I believe it was
24 indicated that title four monies were used, and if I'm
25 not mistaken, I believe it was through the Department of
Page 59
1 Education that those title four monies were expended for
2 this institute. Are you aware of that, by any chance?
3 MR. WATANABE: No, I'm not, but I would
4 say this. We have asked the department to submit to us a
5 report every quarter of all the money being spent,
6 Federal money being spent, and all of the money, all our
7 contracts. We received a report about three days ago,
8 and I was very concerned about that report. I've asked
9 our board staff to check which of these contracts came to
10 the board for approval, and we went through our minutes
11 and found out that many of them did not come to the
12 board. We looked at the title of the expenditure, it
13 appears to be much of these were in the area of the
14 Felix, so it didn't come to us because of the super
15 powers. That brings to mind that the board's concern
16 perhaps, at least a policy to say that these shall come
17 to us for review, not necessarily approval, because
18 approval was bypassed by the super power. The super
19 power was extended, by the way, indefinitely. It expired
20 as of September, I think September, end of September, but
21 then the court extended that power forever like, and we
22 are advised by the Attorney General's office hands off in
23 a nice way.
24 Q. One last question with just a follow up on
25 that. The report that was submitted to the board, was
Page 60
1 that a historical perspective in terms of what Federal
2 monies and how far back did that go?
3 MR. WATANABE: Well, this is supposed
4 to be a quarterly report, so the report would show for
5 the last quarter.
6 Q. I see.
7 MR. WATANABE: And what caught my eye,
8 I think I heard the figure $500,000, I think that was in
9 the report. And what our staff did is to highlight those
10 that were approved by the board, and this was not
11 highlighted, and there were a number of other items in
12 the report that caught my eye, that as I read the purpose
13 of the -- of the money being used was much of these were
14 in the area of the Felix, half a million dollars.
15 Q. Thank you.
16 MR. WATANABE: $100,000. It does raise
17 my eyebrow on that one.
18 Q. Thank you. Perhaps the committee co-chairs can
19 consider obtaining that information. I think it would be
20 helpful. Thank you very much.
21 CO-CHAIR REPRESENTATIVE SAIKI: Could
22 you please submit that report to the committee? Could
23 you please submit that report to the committee, that
24 quarterly report?
25 MR. WATANABE: I will do that. Yeah.
Page 61
1 Okay, we will do that.
2 CO-CHAIR REPRESENTATIVE SAIKI: Thank
3 you. Representative Ito followed by Senator Slom.
4 REPRESENTATIVE ITO: Thank you very
5 much, Co-Chair Saiki. Good morning, gentlemen,
6 Co-Chairs.
7 MR. WATANABE: Good morning.
8 DR. NAKASHIMA: Good morning.
9 BY REPRESENTATIVE ITO:
10 Q. You know, I just want to ask several questions --
11 a couple questions. You know, are you folks aware that
12 there are any DOE personnel working on PREL, working, you
13 know, with PREL on DOE contracts?
14 DR. NAKASHIMA: Are you asking whether
15 former DOE employees?
16 Q. No. Present DOE employees.
17 DR. NAKASHIMA: Not -- it was not --
18 that's not something I know about.
19 MR. WATANABE: I know one person that
20 is working for PREL. The person is on leave actually
21 from DOE working for PREL full-time.
22 Q. And is the person working on Felix issues?
23 MR. WATANABE: I'm not aware of that.
24 I'm not aware of that, Mr. Ito.
25 Q. You know, this kind of leave, what, you folks
Page 62
1 need -- they need approval to take leave?
2 MR. WATANABE: Not board approval.
3 Q. Not board approval? Within personnel do they
4 have to --
5 MR. WATANABE: Yeah.
6 Q. -- sign up for leave and, you know --
7 MR. WATANABE: For leave.
8 Q. You know, during the Felix Consent Decree,
9 1994, who was the superintendent of education?
10 DR. NAKASHIMA: '94 was -- I think
11 wasn't Charley Toguchi still down there? I think it was.
12 Q. And my last question. My last question is, you
13 know, Saturday we heard from the internal auditor from
14 the DOE, and he gave us -- he gave the committee some
15 real good information and recommendations, you know, for
16 the department, and you know, I remember the Board of
17 Education at one -- I think last session, requested one
18 internal auditor. You know, why couldn't the DOE
19 internal auditor, and you know, the Board of Ed and, you
20 know, share this information, you know, since you folks
21 are policy makers, direct the department, because he came
22 up with some real good testimony and very revealing type
23 of information. I think you folks could have used that.
24 DR. NAKASHIMA: Representative Ito, as --
25 when I was on the board we had a number of discussions in
Page 63
1 terms of the need of the board to have an auditor, so
2 like checks and balances, and the department only has
3 one, one auditor, and so we asked that the person be
4 assigned to the Board of Education, and we met great
5 resistance from the superintendent and the auditor and I
6 don't know who else, and the understanding was that all
7 information, all studies done by the auditor would be
8 shared with the Board of Education, and as was brought
9 out today, this past year the internal audit was not
10 shared with the board although the board was CC'd. So --
11 Q. Because, you know, the DOE keep bringing up,
12 you know, you're a team, you know, we're working as a
13 team, and you know, I find it, you know, it's not working
14 as a team.
15 DR. NAKASHIMA: Well, team work
16 requires kind of an attitude of collaboration, of sharing
17 and so forth, and the sharing of information shouldn't be
18 done only when somebody asks for it. Our request of the
19 superintendent was that he share with the board any
20 information that might be useful to the board so that it
21 knows what's going on, and that's been -- that was an
22 ongoing discussion that never got resolved. In fact, the
23 request we made was that at least every two weeks that
24 the superintendent send us a capsule report on what
25 things occurred and what problems are happening. And we
Page 64
1 didn't ask for a multi page, and we said put it on one
2 page because most people don't receive -- don't read
3 multi page stuff. That was never agreed upon. We even
4 had the discussion with a couple of staff members that he
5 sent to iron this out with the board, and it went back to
6 the superintendent, but I don't think he accepted the
7 committee's recommendation. So he ended up only with
8 monthly, one time a month, two hours meeting in which any
9 board member could meet with him during the day and we
10 said that's fine except that there are too many board
11 members who work full-time and they couldn't come to the
12 meetings, so that kind of went the wayside, too, because
13 we ended up with maybe one or two or three members
14 showing up at the briefings.
15 Q. Okay, thank you very much.
16 DR. NAKASHIMA: So there was an ongoing
17 concern about shared information working together and the
18 board supporting the department's efforts --
19 Q. Okay.
20 DR. NAKASHIMA: -- to provide quality
21 education.
22 REPRESENTATIVE ITO: Okay. Thank you
23 very much, Chairman.
24 CO-CHAIR REPRESENTATIVE SAIKI: Thank
25 you. Senator Slom followed by Representative Kawakami.
Page 65
1 SENATOR SLOM: Thank you, Co-Chair
2 Saiki.
3 BY SENATOR SLOM:
4 Q. Gentlemen, good morning.
5 MR. WATANABE: Good morning.
6 DR. NAKASHIMA: Good morning.
7 Q. Have you and the board been keeping up with
8 this committee's work, the hearings, the testimony and so
9 forth?
10 MR. WATANABE: Off and on.
11 Q. Personally or someone briefed you on some of
12 the things that were said?
13 MR. WATANABE: Briefed, briefed by
14 someone.
15 Q. And Dr. Nakashima, as just a follow up to
16 Representative Ito's question and in earlier testimony,
17 you had asked the superintendent for specific financial
18 information, you had asked for specific reports, and is
19 it safe to say that you did not get them in a timely
20 manner or at all?
21 DR. NAKASHIMA: Yes.
22 Q. And you had mentioned earlier, Dr. Nakashima,
23 that certain people have responsibilities and all, but
24 sometimes they don't follow the procedures, they don't do
25 them. Is that a correct statement of what you had said?
Page 66
1 DR. NAKASHIMA: Yes.
2 Q. What, if any, were any of the consequences for
3 those people that didn't do what they were supposed to
4 do?
5 DR. NAKASHIMA: The best the board
6 could do was to remind them that requests were made for
7 information for follow up and provide it.
8 Q. But generally speaking, you probably did not
9 get the information that you wanted or needed, is that
10 safe?
11 DR. NAKASHIMA: Yes.
12 Q. And Mr. Watanabe, you had said earlier that
13 Dr. Groves had been asked to explain what he was doing.
14 Did in fact he do that?
15 MR. WATANABE: Beg your pardon?
16 Q. You had said earlier that Dr. Ivor Groves was
17 asked to give a report or to meet with the Board of
18 Education and explain exactly what he was doing. Did he
19 do that?
20 MR. WATANABE: No, I didn't say that.
21 DR. NAKASHIMA: I mentioned it, Senator
22 Slom.
23 Q. I'm sorry.
24 DR. NAKASHIMA: I mentioned the fact
25 that was one of the things that occurred with the special
Page 67
1 programs committee.
2 Q. Uh huh.
3 DR. NAKASHIMA: Hearing, for example, a
4 report from Dr. Groves as to exactly what his
5 responsibility was, what he was doing with the consent
6 decree.
7 Q. And did he in fact do that? Did he meet with
8 the board and explain it?
9 DR. NAKASHIMA: Yes.
10 Q. He did?
11 DR. NAKASHIMA: He met with the
12 committee.
13 Q. To the committee. Okay. I'm kind of curious.
14 Was this problem of communication with the superintendent
15 with the things that were not done, with the questions
16 that were raised by Mr. Golden and others, with questions
17 that you raised on your board, with the issue of the
18 conflict, nonetheless, this board gave Dr. LeMahieu a
19 glowing evaluation recently, is that not correct?
20 MR. WATANABE: That's correct.
21 Q. And what were the criteria used for this
22 evaluation?
23 MR. WATANABE: We were evaluating the
24 superintendent twice a year until this year, we decided
25 to do it once a year. We had a mid term and then a
Page 68
1 final. That was year two. This last evaluation is for
2 year three, which ended August. The contract period
3 would be four years, the fourth year would have been
4 ending August of the year 2002. In the year three
5 evaluation, each board member would score the person, the
6 superintendent on a scale of one to five on only eight
7 evaluation criteria. Unfortunately, in the evaluation
8 year three, we did not break it down much further than
9 those eight points. I was the chair of the committee for
10 the first two years and we broke it down much finer than
11 eight. We had nine categories, but within nine, we had
12 subcategories that amounted to almost about 84 different
13 items. In this one we had only eight.
14 Q. Is it possible for you to submit those criteria
15 to this committee?
16 MR. WATANABE: Yeah, we could do that,
17 could give you the one before and the one we used last.
18 Q. So despite all of the problems that I mentioned
19 and probably additional problems, too, he still got a
20 glowing report?
21 MR. WATANABE: Yeah. Because we did
22 not look at areas like the contracts.
23 Q. Uh huh.
24 MR. WATANABE: We did not look at the
25 financial report that we requested.
Page 69
1 Q. Uh huh.
2 MR. WATANABE: We have since then asked
3 the -- that the committee chair be changed and we have
4 done that.
5 Q. Mr. Watanabe, at the Board of Education meeting
6 that was held two weeks ago, was the board going to ask
7 for the resignation or terminate the superintendent?
8 MR. WATANABE: No.
9 Q. Why did the board then accept the
10 superintendent's resignation?
11 MR. WATANABE: He submitted on his own.
12 Q. On his own. And could you clarify a statement
13 that you made just recently in the press about wanting to
14 offer the superintendent a severance package? Is that
15 part of his contract or --
16 MR. WATANABE: It's not part of the
17 contract.
18 Q. Just the report?
19 MR. WATANABE: A couple of board
20 members felt that humanitarian basis perhaps we may want
21 to consider a severance pay. That is not a done deal
22 until we check with the Attorney General's office whether
23 it's legal and proper to do that. So that answer will
24 come, we hope by tomorrow.
25 Q. So you've already asked the Attorney General.
Page 70
1 MR. WATANABE: We asked the Attorney
2 General.
3 Q. But it is not part of his original contract, is
4 that correct?
5 MR. WATANABE: It's not part of the
6 contract. When I talked to the superintendent on that
7 Thursday morning when he sent in the resignation to me in
8 writing, in which he apologized to me, and in the letter
9 it says the resignation to be effective immediately. He
10 did not demand for or ask for a severance pay. So we are
11 still waiting to see what the Attorney General --
12 Q. Okay. Thank you, Mr. Watanabe.
13 SENATOR SLOM: Thank you, Co-Chair.
14 CO-CHAIR REPRESENTATIVE SAIKI: Thank
15 you. Representative Kawakami followed by Senator Buen.
16 REPRESENTATIVE KAWAKAMI: Thank you.
17 BY REPRESENTATIVE KAWAKAMI:
18 Q. Good morning, gentlemen.
19 MR. WATANABE: Good morning.
20 DR. NAKASHIMA: Good morning.
21 Q. Just a few questions. I wanted to ask about
22 the Columbia contract, for one thing. Did the board
23 review that?
24 MR. WATANABE: No.
25 Q. Why not?
Page 71
1 MR. WATANABE: Never came to us.
2 Q. And it didn't come to you why? They just
3 didn't feel you should have purview over it?
4 MR. WATANABE: It was still under the
5 court super power.
6 Q. Still under the super powers. Okay. Knowing
7 that Mr. Yoshii as personnel director was very much
8 against this, the board didn't ask for it, to at least
9 review it?
10 MR. WATANABE: I had no idea what the
11 contract was, what was going on until teachers came to
12 the board and testified about the concern of the inequity
13 between what the Columbus people are going to get as
14 compared to what the locally hired people are going to
15 get. That's when I was curious. Then I asked for a copy
16 of the contract. Then I read it and that's when I --
17 that's when I find out what it's all about.
18 Q. So other members of the board did not really
19 know --
20 MR. WATANABE: No.
21 Q. -- what that was about? So that was not even
22 on the agenda for you folks to discuss?
23 MR. WATANABE: Not at all. Not at all.
24 Q. Okay. You know, a contract as big as that,
25 because the monies -- I mean there was a lot of money and
Page 72
1 you're going to go out and hire, I know some of the
2 specialists were very, you know, taken aback because they
3 still had to go out and do the same kind of recruiting
4 that they usually do. So it was double dose, but when
5 they got out in the field, who's going to take their --
6 their request when they can get more money coming under
7 the Columbia thing? And I know for Kauai District we got
8 very few numbers that, you know, accepted the regular
9 contracts because of that kind of thing. But I think
10 that's the kind of thing maybe the board has to ask for,
11 in other words, review something that is -- especially a
12 financial thing that is so great for our state, that we
13 should, you know, really review it at your level. The
14 other thing is I wanted to find out if you wanted --
15 there are no normal kinds of reports that come to you,
16 just a few that the board would review? In other words,
17 you have to ask for them?
18 MR. WATANABE: Yes.
19 Q. Every report that you want, you ask?
20 MR. WATANABE: Yes.
21 Q. Then maybe there should be certain reports that
22 have to come to you.
23 MR. WATANABE: Well, I think,
24 Representative Kawakami, the need right now through all
25 of these days of interesting interactions taking place,
Page 73
1 the board has -- looking to developing policies such as a
2 requirement for review prior to approval. If we have no
3 authority to approve according to the constitution as
4 advised by the Attorney General, then we have to develop
5 policies that allow us to at least review prior to
6 approval. The approval is not -- so on the Felix one, we
7 have never had an opportunity to review. Other reports
8 come to us.
9 Q. I see.
10 MR. WATANABE: At request -- upon
11 request. We call it the IOU.
12 Q. I guess what I'm trying to say is that you
13 need, especially big items, I mean when I say big, I mean
14 it's going to have impact on the State, the whole school
15 system, etc. Those kind of reports have to be
16 automatically, I think, come to the board. And I'd like
17 to see, you know, that kind of thing differentiated
18 between the ones who have to beg for or ask for.
19 MR. WATANABE: Yeah.
20 Q. So -- and the last question I wanted to ask is
21 after Mr. Yoshii was taken off that management, the
22 review process on personnel, am I correct, he was -- when
23 he was laid off, Dr. Nakashima, who reviewed the
24 contracts?
25 DR. NAKASHIMA: The only thing I can
Page 74
1 answer, Representative Kawakami, is that whatever I found
2 out was through reading the E-mail. I didn't know that
3 Mr. Yoshii had been removed as director of personnel and
4 placed to review special education contracts and I did
5 read on the E-mail that he raised questions about the
6 Columbus contract and that -- but it was not something
7 that the board had approved or had been informed about
8 officially. But that I just noted in passing at that
9 time that oh, I guess it's not safe to raise questions
10 because he was removed from reviewing further contracts
11 after that.
12 Q. Okay.
13 DR. NAKASHIMA: The other thing,
14 Representative Kawakami, is all matters relating to the
15 consent decree, negotiations between the department and
16 the court were done just by those parties with the advice
17 of the Attorney General's office, and that anything that
18 was agreed upon were part of the law, consent decree.
19 Therefore, for example, the Columbus contract was part of
20 that agreement and it was our understanding that it's a
21 done deal, I mean, and therefore, that led to the whole
22 notion about forward funding. Because one of the
23 questions we raised was where is this money going to come
24 from because it's all new money and they said we will do
25 forward funding and then we go to the legislature and ask
Page 75
1 for the additional money that's needed so --
2 Q. Okay. The last question is when the
3 superintendent moves money around within the department,
4 do you get an idea of that, does he give you a report?
5 MR. WATANABE: On some areas, yes.
6 Q. On some?
7 MR. WATANABE: Some, not all.
8 Q. Okay. What would be the some, the reason for
9 the some? Is it by the amounts, is it because that
10 department has a lot or what?
11 MR. WATANABE: Usually within EDN you
12 cannot move, for example, money from some EDN to another
13 EDN, but within EDN you could and we do get a report
14 within the EDN.
15 Q. Okay. Well --
16 MR. WATANABE: Not a very detailed
17 report though.
18 Q. Uh huh. Okay. My time is up but thank you
19 very much.
20 REPRESENTATIVE KAWAKAMI: Thank you,
21 Chair.
22 CO-CHAIR REPRESENTATIVE SAIKI: Thank
23 you. Senator Buen followed by Representative Leong.
24 SENATOR BUEN: Thank you, Co-Chair
25 Saiki.
Page 76
1 BY SENATOR BUEN:
2 Q. I have a question in regards to the 2.3 million
3 dollar that was -- that this is regarding the contract to
4 PREL, and the Federal impact aid money was used to
5 contract to PREL. Now, that Federal impact aid money
6 was, I understand, from previous witness that it was to
7 be used for textbooks and supplies. Now that
8 Superintendent LeMahieu has resigned, how is the board
9 looking at how we're going to get these textbooks and
10 supplies to the schools, where is that money going to
11 come from? Has the board looked at that? Because this
12 I'm hearing from students and from the schools that many
13 of these schools do not have textbooks and supplies, so
14 what is the board doing about that?
15 MR. WATANABE: Well, impact aid does
16 not come to the State with a specific guideline how it's
17 going to be spent. It's like open ended allocation to
18 the states that qualify for impact aid. So in saying
19 that it is specifically given to the State for textbooks,
20 I believe is not a correct answer. It is open. For
21 example, part of the impact aid money for the previous
22 year, in other words, I'm talking about fiscal year
23 ending June 30, the Federal fiscal ends in September, the
24 Federal fiscal year begins in October. Part of the
25 impact aid money for the year ending September 2001 was
Page 77
1 used -- has been set aside by the previous superintendent
2 for the bonus that is now being -- hopefully being
3 resolved, and a portion of that if it goes will be
4 probably, if there's any additional need to further count
5 for impact aid beginning October 2001, so it's not
6 necessarily specifically for textbooks, and in this case,
7 the superintendent, previous superintendent used 2.3
8 million of the impact aid of the year ending September 30
9 of this year, Federal fiscal year.
10 Q. I wanted to have an understanding whether the
11 board had in fact -- had known about this monies coming
12 from the Federal impact aid. Were you aware of that?
13 MR. WATANABE: No.
14 Q. You were not?
15 MR. WATANABE: No.
16 Q. I have another question on the communication or
17 what I hear, lack of communication between Dr. LeMahieu
18 as the superintendent and between the board. Do you
19 believe that this lack of communication came after June
20 of 2000 when the Federal court had provided super powers
21 to LeMahieu or was this ongoing from the beginning?
22 DR. NAKASHIMA: If I understand your
23 question, I think the concern with the -- many board
24 members had with the superintendent was we ought not to
25 be working on the basis where we're constantly asking for
Page 78
1 information, that it was his responsibility to determine
2 what things we ought to know about, because otherwise
3 we'd be asking for this and asking for that and we try to
4 stay clear from the internal management of the system,
5 but that we knew that the board's responsibility was to
6 develop policies, set standards for students and monitor,
7 but in order to do those things, we needed to have timely
8 information so that we could respond to the needs of the
9 department. And that was what I personally try to
10 impress to the superintendent, but wasn't always easy to
11 get across to him.
12 Q. Okay. Thank you.
13 CO-CHAIR REPRESENTATIVE SAIKI: Thank
14 you. Representative Leong followed by Representative
15 Marumoto.
16 REPRESENTATIVE LEONG: Thank you.
17 BY REPRESENTATIVE LEONG:
18 Q. Good morning, gentlemen.
19 MR. WATANABE: Good morning.
20 DR. NAKASHIMA: Good morning.
21 Q. Dr. Nakashima, when I heard you speak about the
22 impact aid funds used to contract PREL, it seems like
23 there wasn't complete -- there wasn't really an
24 understanding of how what was happening or how
25 Dr. LeMahieu got these super powers, and you said that it
Page 79
1 was sort of assumed that it came because of Judge Ezra.
2 I wondered if at that time if the AG should have been
3 sought to check onto the super power, did anyone think
4 about doing that, the Attorney General, to look into the
5 super powers?
6 DR. NAKASHIMA: The only specific
7 instance in which I question the interpretation of the
8 application of super powers was with respect to -- since
9 I have to tell you the truth, with Mr. Yoshii. We were
10 informed that Mr. Yoshii was being removed as director
11 because of matters dealing with his performance or
12 nonperformance, and when that was brought to the
13 attention of the officers of the board, we said that's
14 your kuleana, that's internal management. You do what
15 you think is appropriate. And subsequent to that, it was
16 our understanding, it was brought to our attention that
17 Mr. Yoshii was no longer being removed because of lack of
18 performance, but in fact, he was being removed as part of
19 the superintendent's authority to move personnel wherever
20 he wanted to. And I did question at that time whether it
21 was not putting the fox to guard the hen house when in
22 fact Mr. Yoshii had been cited for being responsible for
23 some of the problems that the department had with meeting
24 the consent decree, that why are you now putting him in
25 charge of reviewing special education contracts. I was
Page 80
1 told that those are two different matters and so I said I
2 disagree with you but that's -- you're the Attorney
3 General, so we left it at that.
4 Q. Thank you. Actually, my second question was
5 leading up regarding Mr. Yoshii, because when he was
6 removed from his job, I was wondering what was the --
7 what efforts, if any, were done to investigate this
8 matter, because it seemed to be that what was the Board
9 of Education, what do they feel, you know, seemed like
10 they were -- probably wanted to support his not being
11 removed.
12 DR. NAKASHIMA: Well, again, it's a
13 fine line. Your interpretation you have to draw, is that
14 within the superintendent's authority to appoint and
15 remove. And in fact, if he is being removed for cause,
16 then so be it.
17 Q. All right. Thank you. Then you talked about
18 forward funding and you said -- stated that you were
19 trying to get a report and whom were you seeking, and you
20 did not get a response. Whom were you turning to?
21 DR. NAKASHIMA: Superintendent.
22 Q. Was it the superintendent? Okay, all right.
23 And my last question had to do with on the evaluation of
24 Na Laukoa, that you stated that there were three people
25 on this committee that just said Na Laukoa was all right.
Page 81
1 I wondered on that, I wondered if you questioned that or
2 was it something internal that you couldn't, because you
3 stated that Hamamoto and Dr. Houck and LeMahieu were the
4 ones that approved this contract.
5 DR. NAKASHIMA: Well, I was the one who
6 answered. Let me try to clarify that.
7 Q. Okay.
8 DR. NAKASHIMA: In our discussion with
9 Superintendent LeMahieu with regard to whether -- and his
10 contention was that Mr. Golden had overstepped his bounds
11 in bringing the matter to the Board of Education, and we
12 said all we were told was that he didn't think that Na
13 Laukoa was qualified, could do the job. And the
14 superintendent's response was that he had a committee
15 that reviewed the qualifications of Na Laukoa, and that
16 in fact, all of the committee members thought that Na
17 Laukoa was capable of doing the job, and so I asked him
18 who was on that committee, and he -- and I guess my only
19 response was to smile about it and think, you know, if
20 you want to have somebody be brought up in a good light,
21 you find the people who will do what you want them to do,
22 right?
23 Q. I see.
24 DR. NAKASHIMA: I mean I may have been
25 prejudiced, but when you ask for evaluation, you look for
Page 82
1 supposedly impartial people. So --
2 Q. Thank you. My time is up, sir. Thank you very
3 much.
4 REPRESENTATIVE LEONG: Thank you,
5 Chair.
6 CO-CHAIR REPRESENTATIVE SAIKI: Thank
7 you. Representative Marumoto followed by Co-Chair
8 Hanabusa.
9 BY REPRESENTATIVE MARUMOTO:
10 Q. Good morning, gentlemen.
11 MR. WATANABE: Good morning.
12 Q. What I'm hearing is really very, very sad, and
13 I can hardly believe my ears, but you know, here you are,
14 the duly elected members of the Board of Education,
15 you're supposed to be making policy for the schools, and
16 you've been bypassed, you've had no information, you're
17 lacking financial information and really you've been
18 stripped of authority by a Federal judge and kept out of
19 the loop by the superintendent. I wouldn't say it was
20 your fault at all, but it was circumstances beyond all of
21 us. I think the legislature has been kept out of the
22 loop, too, and has to -- has gone through this
23 extraordinary process of an investigative committee to
24 try and find out what's happened, but I certainly hope
25 that the Federal judge has been watching TV and now knows
Page 83
1 himself what's going on down in the lower depths of the
2 Department of Education and maybe the Department of
3 Health. But stop me if this question has been asked, I
4 haven't been in the room the entire time, but regarding
5 the Federal funds and the impact funds which are supposed
6 to be spent for our children, sons and daughters of the
7 military, do you think all that money has been
8 appropriately spent? Do you have any questions as to how
9 it might have been maybe misdirected?
10 MR. WATANABE: After all of these
11 things had occurred, not only for the impact aid, the use
12 of impact aid in the PREL contract, the impact aid in the
13 settlement of the teachers' pay, I know that the board
14 committee on budget accountability is very concerned
15 about this, is going to look into it much deeper in all
16 aspects. You're correct. What -- how do we get this
17 money? It's impact aid. We conduct a Federal survey
18 every year to determine how many students are living in
19 areas, in affected area, and based on that, we get the
20 money, and in a sense it should technically go back to
21 those. We're going to look into that, not look, but do
22 something about it. It's unfortunate in this case that
23 in the case of the PREL contract it was -- they used --
24 the court order was used for that. We don't know about
25 how much other money was used as a result of that. The
Page 84
1 Columbus contract is a good case, 100 million dollars,
2 the court order was used. And I received, and I'm going
3 to share the report as requested by the legal counsel, of
4 how much other monies were used as a result of the
5 Federal -- the court order granting the super powers.
6 That never came to the board for even review. I think
7 it's substantial. I heard, you know, a half a million
8 dollars. I think there are other money, too, but I think
9 the board now realizes that if we have to reword our
10 policy we will do that.
11 Q. So despite the fact that the Federal judge gave
12 the superintendent inordinate amount of power, super
13 powers, do you think some of the money was
14 inappropriately spent and perhaps were not legal?
15 MR. WATANABE: I can't answer that to
16 say if it's legal or not, whether it's inappropriate. If
17 it is to help the kids in these areas that right now the
18 Felix Consent Decree areas, I would say it's
19 appropriately spent. My concern is that it perhaps
20 should have come to us even for review or at least say
21 hey, look, I'm going to spend the money for this. It
22 would have created a much better relationship.
23 Q. But you did question the fact that if the money
24 was used for -- like for instance, the Na Laukoa portion
25 of the PREL contract, that it might not have gone to
Page 85
1 children of military dependents?
2 MR. WATANABE: I don't know.
3 Q. Okay, thank you anyway.
4 CO-CHAIR REPRESENTATIVE SAIKI: Thank
5 you. Co-Chair Hanabusa.
6 CO-CHAIR SENATOR HANABUSA: Yes. Thank
7 you.
8 BY CO-CHAIR SENATOR HANABUSA:
9 Q. You mentioned, Mr. Watanabe, that with the
10 recent evaluation of the superintendent, the chair had
11 changed the criteria from when you chaired that
12 evaluation, and the chair is to be changed. Who is this
13 chair?
14 MR. WATANABE: The one that did the
15 chair, previous chair was First Vice Chairman Sakarai.
16 Q. And you said that he will be changed?
17 MR. WATANABE: The new chair will be
18 Mrs. Akaida, Donna.
19 Q. Donna Akaida. Dr. Nakashima stated in his
20 testimony that he believes that the role of the board is
21 to develop policies, set standards and to monitor the
22 department. Would you agree with that statement? You,
23 Mr. Watanabe, would you agree with basically what
24 Dr. Nakashima said?
25 MR. WATANABE: Repeat that, please?
Page 86
1 Q. He said to develop policy, set standards and to
2 monitor the department. Would you agree that that's the
3 role of the Board of Education?
4 MR. WATANABE: It will be to set policy
5 and to hire the superintendent.
6 Q. And to hire the superintendent. Okay.
7 MR. WATANABE: Who would then manage
8 the system.
9 Q. Do you believe that the board has any
10 obligation to monitor once the superintendent manages?
11 MR. WATANABE: Yes.
12 Q. And when you used the word monitor, what comes
13 into your mind, what do you expect from the
14 superintendent?
15 MR. WATANABE: What's he doing each
16 time or doing -- what is he doing within the system. He
17 would give us a report on how the system is functioning,
18 what is going on, how the money's being spent.
19 Q. Now, on October 17, 2001, you sent Co-Chair
20 Saiki and myself a letter, and in it you were explaining
21 that the board had basically not known about the PREL
22 contract or the Columbus contract, and you cite in it
23 policy 1200-1.13, which is personal services contract,
24 which you say that the board's approval is required for
25 all negotiated nonbid agreements or sole source contracts
Page 87
1 of $25,000 or more.
2 MR. WATANABE: That's correct.
3 Q. Do you remember this letter?
4 MR. WATANABE: Yes.
5 Q. Okay. Is that an example of a board policy,
6 this policy 1200-1.13?
7 MR. WATANABE: That's correct.
8 Q. In addition, you say that there's a Board of
9 Education policy 6101 called the use of Federal funds.
10 And this is to basically govern the proposed use of
11 impact aid of the Department of Defense funds. Is that
12 also correct?
13 MR. WATANABE: That's correct, all of
14 the Federal funds.
15 Q. All of the Federal funds including what we're
16 calling impact aid funds?
17 MR. WATANABE: That's correct.
18 Q. Now, what is your understanding, Mr. Watanabe,
19 and if Mr. -- if Dr. Nakashima has a different opinion,
20 I'd like to hear of it, that when Dr. LeMahieu was given
21 the super powers by the Federal Court, was it your
22 understanding that the board had no say and had no --
23 even the right to review? Was the super powers explained
24 to you?
25 MR. WATANABE: I don't recall being
Page 88
1 explained to us. We were told -- we were advised by the
2 Attorney General that it's out of our jurisdiction.
3 Q. Even the right to review whatever the
4 superintendent is doing?
5 MR. WATANABE: The word review never
6 came up.
7 Q. So was there ever a point in time after
8 Dr. LeMahieu received the super powers where the board
9 questioned either your own attorney or the Attorney
10 General as to what is the extent of the superintendent's
11 super power as it relates to the board's ability to
12 monitor?
13 MR. WATANABE: I defer to --
14 Q. Dr. Nakashima, was there any inquiry made like
15 that by the board?
16 MR. WATANABE: Not at the time.
17 DR. NAKASHIMA: Not at the time that
18 the conferring of the so-called super powers was granted
19 by the court. Only -- the only thing in passing was that
20 we, for example, on the PREL contract, we were not party
21 to it simply because the Attorney General said not even
22 they were asked to review.
23 Q. And the implication was not only were they not
24 asked to review, but not only -- they had no right to
25 review, is that what you're saying?
Page 89
1 DR. NAKASHIMA: I don't think -- we
2 took that to be implied, that that's the reason why they
3 were not reviewing it.
4 Q. Dr. Watanabe -- I mean Mr. Watanabe, you said
5 something interesting in one of your testimony, and
6 you're referring to the Columbus contract at 100 million
7 dollars. And you were also explaining how the board
8 basically assisted the department coming before the
9 legislature and asking for these emergency funds and the
10 funds went from 41, 44 million all the way to 27 million.
11 I recall in hearing the board's, and well, your and, I
12 guess the department's testimony that the Columbus
13 contract was about 100 million. Was that your
14 understanding at that time when you came before us? You
15 have to vocalize your response. You have to say yes.
16 MR. WATANABE: Yes.
17 Q. Okay. Did you know or did you ask prior to
18 coming before the legislature to see the Columbus
19 contracts?
20 MR. WATANABE: To what?
21 Q. To actually see the Columbus contracts that
22 were executed?
23 MR. WATANABE: I asked to have a copy
24 of that because there were people, teachers who came to
25 the board to testify who were very angered that the
Page 90
1 contract -- those people under the Columbus contract were
2 getting paid much more, to receive stipends like travel
3 expenses, etc. As a result of that, then I asked to see
4 the copy of that and get a copy of the contract. The
5 contract itself did not ever come to the board for review
6 or just for information, but because of these
7 testimonies, I wanted to see what the contract was all
8 about.
9 Q. Did you ever get a copy of it?
10 MR. WATANABE: I did get a copy and I
11 read through that and it talked about how many people
12 they're going to hire, what the contract terms were, etc.
13 Q. Do you recall when you got a copy of that
14 contract?
15 MR. WATANABE: No, I don't.
16 Q. Was it like before you came to testify before
17 the legislature about the 100 million dollar Columbus
18 contract?
19 MR. WATANABE: Yes.
20 Q. It was before that?
21 MR. WATANABE: Before that.
22 Q. So is it your recollection that the Columbus
23 contract that you saw was 100 million dollars?
24 MR. WATANABE: I didn't see it as 100
25 million dollars then. No. That time when we came to you
Page 91
1 people, no.
2 Q. You hadn't seen the contract, is that what
3 you're saying?
4 MR. WATANABE: I haven't seen the
5 dollar amount. I just reviewed the kind of things that
6 they were going to provide. I didn't see the dollar
7 amount.
8 Q. The reason I'm asking this is because I wanted
9 to know whether the board was made aware that originally
10 the contract in September of 2000 was 120 million, then
11 it changed to 100 million, and by December of 2000 before
12 we convened in the legislature, the Columbus contract had
13 been again amended to 40 million for the whole two and a
14 quarter year contract.
15 MR. WATANABE: I'm not aware of that.
16 Q. So as you sit here today, you still believe the
17 Columbus contract is a 100 million dollar contract, is
18 that right?
19 MR. WATANABE: That's right.
20 Q. So even after requesting this information from
21 Dr. LeMahieu, you have never been made aware of the
22 changes made to the Columbus contract?
23 MR. WATANABE: No.
24 Q. Thank you.
25 CO-CHAIR REPRESENTATIVE SAIKI: Thank
Page 92
1 you. I just have a few questions.
2 BY CO-CHAIR REPRESENTATIVE SAIKI:
3 Q. The first one is more general. To what extent
4 since the -- since the State entered into the consent
5 decree in 1994, to what extent has the Board of Education
6 played a role in developing the terms of the consent
7 decree, the benchmarks, the Felix response plan
8 conditions?
9 MR. WATANABE: We have not been
10 involved in developing anything, we're involved in
11 getting information as to the status more recently during
12 the time of the last superintendent, we get a report back
13 as to far as how we are faring out in meeting the
14 criteria set forth by the courts.
15 Q. Well, has the board ever been consulted before
16 a decision was made with respect to benchmarks or Felix
17 response plan as to your approval or to your advice on
18 these matters?
19 MR. WATANABE: I came on the board in
20 1990 --
21 DR. NAKASHIMA: Six.
22 MR. WATANABE: Six. I was not made
23 aware of the details of this until 1999.
24 Q. So the court monitor, the court monitor's
25 consultants, the superintendent, have never asked the
Page 93
1 board for your advice or opinion before a decision was
2 made with respect to terms of the consent decree?
3 DR. NAKASHIMA: No, we have not. We
4 were not.
5 Q. You know, I guess I'll ask this directly, I
6 think it has been asked indirectly, but do you think that
7 the Federal court monitor and the superintendent used the
8 consent decree to basically bypass any authority that the
9 board had?
10 MR. WATANABE: Well, in my opinion I
11 don't think it was done intentionally to bypass the
12 board. I think the -- my understanding is that they
13 wanted to -- the court -- my understanding, the court
14 wanted the department to do something to help these
15 youngsters. I don't think it was done to bypass the
16 board is my feeling.
17 Q. Well, did the board ever ask for a role in
18 developing the response plan or the benchmarks?
19 MR. WATANABE: Not in my time.
20 DR. NAKASHIMA: No.
21 Q. The board has never asked?
22 DR. NAKASHIMA: No.
23 Q. Okay. I had a couple of questions on the
24 Columbus contract. Do you at the point that the board
25 requested information or at least a copy of the Columbus
Page 94
1 contract, was there further investigation done by the
2 board into that contract?
3 MR. WATANABE: No investigation was
4 conducted.
5 Q. Did anybody ever ask how this contract arose in
6 the first place?
7 DR. NAKASHIMA: No. I don't believe
8 so.
9 Q. Has the board ever dealt directly with the
10 court monitor on Felix matters aside from that one
11 meeting that you had mentioned earlier?
12 MR. WATANABE: Not in my time.
13 DR. NAKASHIMA: No.
14 Q. Has the board ever dealt directly with Lenor
15 Behar?
16 MR. WATANABE: Who?
17 Q. Lenor Behar. She was a consultant.
18 MR. WATANABE: I don't know who she is
19 or who the person is.
20 DR. NAKASHIMA: No.
21 Q. Has the board ever dealt directly with Judy
22 Schrag?
23 MR. WATANABE: No.
24 DR. NAKASHIMA: No.
25 Q. Okay. Thank you.
Page 95
1 CO-CHAIR REPRESENTATIVE SAIKI:
2 Members, we'll take follow up questions at this point.
3 First from Special Counsel.
4 SPECIAL COUNSEL KAWASHIMA: I have
5 none.
6 CO-CHAIR REPRESENTATIVE SAIKI:
7 Members, any follow up questions? Representative Ito.
8 REPRESENTATIVE ITO: I just have one.
9 Thank you, Chair.
10 BY REPRESENTATIVE ITO:
11 Q. You know, you mentioned the two million dollar
12 lapse for the bus transportation. Was that what, special
13 ed funds or --
14 MR. WATANABE: I'm not sure where that
15 fund is, Mr. Ito, but I think it's in that total package
16 of the twelve million.
17 Q. How much? Twelve million?
18 MR. WATANABE: The total amount was
19 twelve million in the lapse of which eight -- eight
20 became -- eight is 150.
21 Q. So that wasn't --
22 MR. WATANABE: Some mention, two
23 million dollars was transportation. I have to go back
24 and check it to see more detail as to what the special
25 amounts relate to that -- eight million of that twelve is
Page 96
1 150, it means that four million dollar out there
2 somewhere, and my understanding was of that four, two
3 million came up was for transportation lapse, and I heard
4 somewhere that is a result of the savings incurred as a
5 result of the strike. So I have to check that out
6 carefully what it is.
7 Q. Because I'm concerned because about last year,
8 not last year, two years ago we allocated monies for bus
9 transportation for the Hawaii emergent program.
10 MR. WATANABE: Yes.
11 Q. They was having a hard time.
12 MR. WATANABE: Yes.
13 Q. So we gave the program about 75,000 so -- okay,
14 well, thank you.
15 REPRESENTATIVE ITO: Thank you, Chair.
16 CO-CHAIR REPRESENTATIVE SAIKI: Thank
17 you. Members, any other follow up questions?
18 SPECIAL COUNSEL KAWASHIMA: Excuse me.
19 BY SPECIAL COUNSEL KAWASHIMA:
20 Q. I forgot to -- I neglected to bring one matter
21 forward, and that is there are certain notice
22 requirements that the committee's working under. And in
23 your case, Dr. Nakashima and Mr. Watanabe, you have
24 agreed to waive those notice requirements?
25 MR. WATANABE: That is correct.
Page 97
1 DR. NAKASHIMA: Yes.
2 Q. Thank you very much. No further questions.
3 CO-CHAIR REPRESENTATIVE SAIKI: Thank
4 you. Co-Chair Hanabusa?
5 CO-CHAIR SENATOR HANABUSA: Yes.
6 BY CO-CHAIR SENATOR HANABUSA:
7 Q. Mr. Watanabe, in the lapsing of funds and
8 forward funding, as far as you know, at the end of this
9 past fiscal year, all the money that was either given to
10 you by appropriation or by emergency appropriation would
11 have been included in EDN 150, would that be a correct
12 statement?
13 MR. WATANABE: I would presume so, yes.
14 Q. The -- as you know, EDN 150 was a total amount
15 of about 150 million for that just one line item. Does
16 that sound correct to you? EDN 150 appropriated --
17 MR. WATANABE: It was a large amount
18 but I do not have a specific amount, but it's a large
19 amount.
20 Q. Now, one of the concerns that we have when we
21 looked at that, the lapsing issue, is that you also have
22 the ability to encumber funds at the board level, and
23 it's also a different set of rules than everyone else.
24 Are you aware of what it takes to encumber funds for the
25 Board of Education?
Page 98
1 MR. WATANABE: The law created by the
2 legislature allows the department to -- let's see, carry
3 over, call it, is that what you're referring to?
4 Q. No, no. I do understand, out of the -- you
5 lapse eight million in EDN 150 and you're able to retain
6 five percent of your budget, so that permitted you to
7 retain nine million, so in essence, the total amount
8 that's reflected as unspent, clearly unspent at the end
9 of that fiscal year was about 17 million plus, between
10 the five percent that you retained plus the eight percent
11 that -- I mean eight million -- the five percent, the
12 eight million that lapsed, five percent equaled nine
13 million, so 17 million was what you had clearly left
14 over. But in addition to that, EDN 150 was very unusual
15 in that it also reflected encumbrances of 13 million
16 dollars, larger than any other EDN number. My question
17 is I understand the department has a very different rules
18 as to how it encumbers funds and I want to know if you
19 know what those rules are.
20 MR. WATANABE: I don't.
21 Q. Because what we're concerned about is that if
22 you have a lax standard different from everyone else,
23 which is what we've been told by budget and finance, you
24 really were looking at almost 30 million dollars at the
25 end of last fiscal that was available at EDN 150, and
Page 99
1 that's more than the appropriated amount for emergency
2 funding that we gave you. We gave you between 24, 27
3 million, and you almost would have lapsed 30 million
4 dollars. So we're trying to get an understanding as to
5 how that happened. Do you have any idea?
6 MR. WATANABE: No, I have no idea.
7 Q. Thank you.
8 MR. WATANABE: I have to check that
9 out.
10 CO-CHAIR REPRESENTATIVE SAIKI: Senator
11 Slom.
12 SENATOR SLOM: Thank you.
13 BY SENATOR SLOM:
14 Q. Mr. Watanabe --
15 MR. WATANABE: Yes.
16 Q. -- with everything that you've heard here,
17 information you've requested you never got, actions that
18 were not taken, the things that you have learned and you
19 followed this committee, does the Board of Education have
20 any regrets or are there things that the board wishes it
21 would have done differently?
22 MR. WATANABE: I won't say regrets, but
23 what they told us is we got to do something different.
24 Q. Okay, thank you.
25 SENATOR SLOM: Thank you, Co-Chair.
Page 100
1 CO-CHAIR REPRESENTATIVE SAIKI: Thank
2 you. Members, any other questions? Okay. If not, thank
3 you very much for your testimony today. Members,
4 Co-Chairs would like to move that we convene in executive
5 session for approximately twenty minutes for the purpose
6 of discussing the witnesses that are scheduled for
7 today's agenda as well as to discuss the overview of the
8 investigation.
9 CO-CHAIR SENATOR HANABUSA: And --
10 CO-CHAIR REPRESENTATIVE SAIKI: And
11 also to obtain an update on the motion to quash the
12 subpoena of Judy Schrag. Is there any discussion?
13 CO-CHAIR SENATOR HANABUSA: One other
14 point. Members, the -- our House members will be going
15 into session at twelve and the Senate will be going in at
16 five o'clock this afternoon, I believe. So for purposes
17 of the public, we will not be reconvening here until one,
18 hopefully one, till one. So after executive session, the
19 House members will be in session, Senate members, you'll
20 be basically on call until one o'clock when we will
21 reconvene, so with that understanding, members, we would
22 like to take a vote on executive session for the purposes
23 enumerated by Co-Chair Saiki.
24 CO-CHAIR REPRESENTATIVE SAIKI: Yes.
25 CO-CHAIR SENATOR HANABUSA: Any other
Page 101
1 discussion?
2 CO-CHAIR REPRESENTATIVE SAIKI: Take a
3 roll call.
4 CO-CHAIR SENATOR HANABUSA: Co-Chair
5 Saiki?
6 CO-CHAIR REPRESENTATIVE SAIKI: Yes.
7 CO-CHAIR SENATOR HANABUSA: Vice-Chair
8 Kokubun?
9 VICE-CHAIR SENATOR KOKUBUN: Aye.
10 CO-CHAIR SENATOR HANABUSA: Vice-Chair
11 Oshiro?
12 VICE-CHAIR REPRESENTATIVE OSHIRO: Aye.
13 CO-CHAIR SENATOR HANABUSA: Senator
14 Buen?
15 SENATOR BUEN: Aye.
16 CO-CHAIR SENATOR HANABUSA:
17 Representative Ito?
18 REPRESENTATIVE ITO: Aye.
19 CO-CHAIR SENATOR HANABUSA:
20 Representative Kawakami?
21 REPRESENTATIVE KAWAKAMI: Aye.
22 CO-CHAIR SENATOR HANABUSA:
23 Representative Leong?
24 REPRESENTATIVE LEONG: Aye.
25 CO-CHAIR SENATOR HANABUSA:
Page 102
1 Representative Marumoto?
2 REPRESENTATIVE MARUMOTO: Aye.
3 CO-CHAIR SENATOR HANABUSA: Senator
4 Matsuura is excused. Senator Sakamoto is excused.
5 Senator Slom?
6 SENATOR SLOM: Aye.
7 CO-CHAIR SENATOR HANABUSA: Co-Chair
8 Hanabusa. The motion is carried.
9 CO-CHAIR REPRESENTATIVE SAIKI: Thank
10 you. Members, we'll convene in room 325 and the public
11 hearing will reconvene in this room at one p.m.
12 (Recess.)
13 CO-CHAIR SENATOR HANABUSA: Members,
14 we'll reconvene. At this time we would like to recall
15 Dr. Nakashima and Mr. Watanabe.
16 BY SPECIAL COUNSEL KAWASHIMA:
17 Q. Gentlemen, you're reminded you're still under
18 oath.
19 MR. WATANABE: Yes.
20 DR. NAKASHIMA: Yes.
21 Q. And you have your counsel with you, Mr. Onouye.
22 I understand you have some documents you would like to
23 have us look -- the committee look at, and will you
24 describe the document, please?
25 MR. WATANABE: Thank you. Co-Chair
Page 103
1 Hanabusa and Saiki and members of the committee, there
2 are several questions asked at this point with regard to
3 the role of the board and why we didn't do anything or
4 didn't do things a certain way, and we indicated -- I
5 indicated to you and I think also Dr. Nakashima, that
6 we've been advised by the Attorney General in a nice way
7 to say butt out, and I'd like to share these two
8 documents with you. These were attorney-client
9 communications which the Board of Education authorized me
10 to release, if necessary. And I won't go any further
11 than that except to say these documents will clarify what
12 we have been told by the Attorney General in a nice way,
13 butt out. And I'll share these documents with you.
14 They're both addressed to Dr. Nakashima, and I think I
15 should read this, you'll see why our hands are tied.
16 Q. All right.
17 MR. WATANABE: So I'll leave this with
18 you.
19 Q. Thank you. Now, just a few questions, sir.
20 MR. WATANABE: Yes.
21 Q. Both of you, Dr. Nakashima and Mr. Watanabe. I
22 think you've already stated it, but you understand that
23 these documents that you are providing the committee may
24 very well be considered attorney-client matters, you
25 understand that?
Page 104
1 MR. WATANABE: It is indicated as
2 attorney-client on the top of the page. And I've asked
3 the board for authorization to release it.
4 Q. All right. So that the Board of Education as
5 the client is willing to waive that privilege?
6 MR. WATANABE: That's correct, sir.
7 Q. And you understand also that because of that
8 waiver and because of the manner in which the committee
9 conducts itself, that may become public record?
10 MR. WATANABE: Yes.
11 Q. A matter of public record?
12 MR. WATANABE: Yes.
13 Q. All right. Thank you. We will accept those.
14 SPECIAL COUNSEL KAWASHIMA: Mr. Onouye?
15 MR. ONOUYE: Mr. Kawashima, if I may
16 make a special appearance for the record, note I am
17 appearing here as also to clarify the Attorney General
18 opinions and that the board members in executive session
19 did indicate that they release the Attorney General
20 opinions to Mr. Watanabe for release, if necessary, and
21 they all voted unanimously to waive their attorney-client
22 privilege. Also for the record, I am the Board of
23 Education's executive director, but by memorandum of --
24 agreement, I am Special Deputy Attorney General only for
25 purposes of rendering opinions at the board meetings, so
Page 105
1 in this light, my appearance is very limited.
2 SPECIAL COUNSEL KAWASHIMA: I see. But
3 you are not the author of those opinions as contained in
4 the documents that will be turned over, are you?
5 MR. ONOUYE: No, and in fact, if I may
6 elaborate a little bit further, the board at that time
7 had very grave concerns about these opinions as far as
8 how they limited the board's operations, and at that time
9 we, myself and another attorney in our office drafted
10 another opinion trying to modify that opinion and
11 basically it was held up.
12 SPECIAL COUNSEL KAWASHIMA: Well, am I --
13 without having looked at those documents, just based on
14 what I've heard so far, am I to understand that those
15 letters contained opinions, attorney opinions as to what
16 the super power orders allowed or would not allow the
17 board to do?
18 MR. ONOUYE: If I could, and this is
19 going to require a little bit more elaboration, the board
20 had questions regarding the super powers. Dr. Nakashima
21 and myself and I believe Ms. Knundsen met with the
22 Attorney General at one stage and questioned them on the
23 parameters with what the board could operate under these
24 super powers and at that time the contract of the Na
25 Laukoa did come up, and what would the scope of the
Page 106
1 board's powers be. At that time we were informed that
2 the superintendent did have these super powers and that
3 the board couldn't -- well, that not only the board was
4 left out, but the Attorney General was left out on that
5 contract. Now, regarding these attorney opinions, they
6 came up a little later. What had transpired was there
7 was a dispute on Mr. Yoshii's personnel action. At that
8 time, the board inquired about whether -- this is going
9 to require a little bit more explanation and I'm only
10 saying this because there's a lot of intricacies that
11 happened. What happened was in the board's by-laws, it
12 requires that the board delegated these powers of
13 appointments to the superintendent, but in a regulation
14 that it's stated that the board has the power to do these
15 appointments, so as a clarification, the board said that
16 they wanted to handle this personnel transaction. They
17 wrote a memo to the superintendent saying that based on
18 these policies, they needed to overlook or oversee this.
19 At that time, as you can see by one of the Attorney
20 General opinions, it will be reflected that the
21 superintendent sought an AG opinion regarding the memo
22 that the board sent to him, and that basically limited
23 the powers of the board.
24 SPECIAL COUNSEL KAWASHIMA: So let me
25 just clarify. Your understanding, sir, and the
Page 107
1 understanding of the board was that although there were
2 these super powers that were enacted and placed into
3 effect, the super powers do not necessarily reference the
4 issue of whether or not there ought to be overview of the
5 matters that are contained within the super powers that
6 these people have, right?
7 MR. ONOUYE: The AG opinion, the one in
8 particular basically says clearly that in the personnel
9 realm or personnel organization, that the board didn't
10 have any powers regarding anything related to Felix.
11 SPECIAL COUNSEL KAWASHIMA: I
12 understand that the Attorney General opinion may say
13 that, but I understand it also is the board's and your
14 position that the order that gave these super powers did
15 not address that issue specifically, did it, as to
16 whether or not there should be overview?
17 MR. ONOUYE: Right.
18 SPECIAL COUNSEL KAWASHIMA: So that
19 it's your opinion that there ought to be some overview of
20 whatever conduct is taken or action that is taken even in
21 accordance with the super powers?
22 MR. ONOUYE: Well, I believe the board
23 felt that they should have some oversight in it.
24 SPECIAL COUNSEL KAWASHIMA: All right.
25 MR. WATANABE: Both documents were
Page 108
1 authored by Mr. Suzuki and approved by the Attorney
2 General himself.
3 SPECIAL COUNSEL KAWASHIMA: All right,
4 that's all then.
5 CO-CHAIR SENATOR HANABUSA: Thank you.
6 Thank you very much. Leave it with the clerk there.
7 Thank you.
8 SPECIAL COUNSEL KAWASHIMA: Thank you,
9 gentlemen.
10 CO-CHAIR SENATOR HANABUSA: Members, we
11 will continue with the agenda. We'd like to call Miss
12 Paula Yoshioka at this time. Miss Yoshioka, thank you
13 for appearing here today. We'll administer the oath.
14 CO-CHAIR REPRESENTATIVE SAIKI: Miss
15 Yoshioka, do you solemnly swear or affirm that the
16 testimony you're about to give will be the truth, the
17 whole truth and nothing but the truth?
18 MS. YOSHIOKA: Yes. I do.
19 CO-CHAIR REPRESENTATIVE SAIKI: Thank
20 you. We'll proceed with questioning by Mr. Kawashima.
21 MS. YOSHIOKA: May I say something
22 first? Thank you.
23 SPECIAL COUNSEL KAWASHIMA: Sure. Just
24 a second. Thank you, Chair Saiki. Will you first though
25 please state your name and business address?
Page 109
1 MS. YOSHIOKA: Paula Yoshioka. My
2 business address is the Queens Medical Center, University
3 of Hawaii, Department of Psychiatry.
4 E X A M I N A T I O N
5 BY SPECIAL COUNSEL KAWASHIMA:
6 Q. All right. Ms. Yoshioka, you wanted to make a
7 statement?
8 A. Yes. First of all, Co-Chairs Hanabusa and
9 Saiki and members, thank you for the invitation to come
10 here. I hope to be helpful and to answer questions that
11 you may have. To my right is Mr. Richard Nakamura. As
12 you may know, I have been sued in my official capacity
13 and my individual capacity, and because of my individual --
14 individual suit, and my personal assets are at risk,
15 there may be questions that I may have to ask counsel as
16 to whether or not I can answer. But I will be as helpful
17 as I can, so please ask any question that you deem
18 appropriate.
19 Q. Well, thank you. Well, Mr. Yoshii was here
20 also testifying a while ago, and we accorded him
21 courtesies that we will accord you, also.
22 A. Thank you.
23 Q. All right. So let me ask you, Miss Yoshioka,
24 you are currently with the UH School of Medicine?
25 A. Yes, I am.
Page 110
1 Q. In what capacity?
2 A. I am the -- functionally the director of
3 business affairs.
4 Q. And so you are no longer with the Department of
5 Education?
6 A. That's correct.
7 Q. And when did you leave the Department of
8 Education?
9 A. Effectively I started with the University of
10 Hawaii June 1 of year 2001.
11 Q. All right. And how -- am I to understand you
12 left the Department of Education and went directly to the
13 university?
14 A. Yes.
15 Q. And for how long prior to that, prior to June 1
16 had you been with the Department of Education?
17 A. I started with the Department of Education on
18 February 1, 2000.
19 Q. And before that by whom were you employed?
20 A. The lieutenant governor's office as her chief
21 of staff for a period of nine months.
22 Q. And prior to that, ma'am?
23 A. Prior to that, deputy director, Department of
24 Health, over administration.
25 Q. Okay. I understand when you left the
Page 111
1 Department of Education, you were an assistant
2 superintendent?
3 A. That's correct.
4 Q. And you were in that position for how long
5 before you left the department?
6 A. One year.
7 Q. And what were your responsibilities there,
8 ma'am?
9 A. I was the assistant superintendent over the
10 Division of Administrative Services. Underneath that
11 division are essentially five branches, personnel
12 services, business services, facilities management,
13 school food services and information technology support.
14 Q. Now, am I to understand that you held no other
15 positions with the department other than assistant
16 superintendent?
17 A. That's correct.
18 Q. In the course of your duties as assistant
19 superintendent at the Department of Education, you became
20 involved with the executing of a contract in the amount
21 of 100 million dollars with Columbus Educational
22 Services, did you not?
23 A. That's correct.
24 Q. What was your involvement with that contract,
25 ma'am?
Page 112
1 A. My involvement was to negotiate the contract
2 and have it executed in order to meet Felix benchmark
3 dates for recruitment and retention.
4 Q. All right. Who made the assignment to you to
5 perform those services, duties?
6 A. Deputy Director Pat Hamamoto. Actually she's
7 deputy superintendent. Sorry.
8 Q. Now, I've handed to you a document called a
9 summary information required for budget request, it's a
10 two page document. Have you had an opportunity to read
11 that, Miss Yoshioka?
12 A. Yes, I have.
13 Q. Are you familiar -- we'll mark that as Exhibit
14 1 for identification. Are you familiar with this
15 document?
16 A. I don't recall reading it, but I do understand
17 what's written inside of it.
18 Q. All right. While you were there at the
19 department, Ms. Yamasaki, Josephine Yamasaki, did she
20 work for you?
21 A. Yes, she did.
22 Q. And in the normal course of the work that she
23 did and you did there, would she be charged with drafting
24 and circulating summary information documents such as
25 this one?
Page 113
1 A. Yes.
2 Q. And this one relates to Columbus Educational
3 Services contract, although you have no specific
4 recollection of having reviewed it in the normal course
5 of business there at the department this would have come
6 across your desk, of course?
7 A. Most likely. Sometimes the budget office would
8 work directly with the staff for documents that they need
9 for budget preparation. Most of the time these things
10 would have come across my desk, yes.
11 Q. All right. Now, you testified a minute or two
12 ago that you are familiar with the information contained
13 within the document. Let me address your attention to
14 paragraph number two, the large paragraph at the bottom
15 where the document states DOE must adhere to the court
16 monitor's requirement that DOE contract with the Columbus
17 Educational Services to recruit applicants to fill
18 existing special education teacher vacancies -- to fill
19 special education teacher vacancies, period. And I think
20 it goes on to suggest what might happen if that contract
21 was not entered into, but nonetheless, I'm focusing on
22 the one sentence there and I'm focusing more on the part
23 of the sentence that suggests that the department had
24 some kind of compulsion to adhere to the court monitor's
25 requirement. You see that, ma'am?
Page 114
1 A. Yes.
2 Q. Does that sound familiar to you?
3 A. No. That's not my recollection of what
4 occurred. When the August 2 stipulation came from the
5 Federal Court requiring the department to retain a
6 mainland contractor by August 15, what we were faced with
7 was trying to decide with whom we would contract with
8 because the department had no experience in a firm of
9 this nature, and so as I discussed this with Pat
10 Hamamoto, the deputy superintendent, I know that she
11 initiated a call to the monitor to ask for
12 recommendations. What came back was a recommendation
13 with the name Columbus.
14 Q. Well, was it your understanding though when
15 Deputy Superintendent Hamamoto called the court monitor,
16 are we talking about Ivor Groves, are we not?
17 A. Right. Correct.
18 Q. All right. When Ms. Hamamoto contacted
19 Dr. Groves, that -- she was seeking recommendations?
20 A. Right.
21 Q. And when we say recommendations, I would expect
22 that she would be seeking more than one organization with
23 which to discuss terms of contracting, and of course, to
24 choose one of them, but I assume that she was asking for
25 more than one choice, right?
Page 115
1 A. I don't know what the exact conversation was
2 except that I do know she called the monitor to find out
3 if he had or knew of companies that we might consider,
4 and the one name that did come back was Columbus.
5 Q. Let me ask you this, ma'am. I'm looking at a
6 part of an article in the Star Bulletin. I believe that --
7 I don't have the date of it, but it talks about the DOE
8 scales back on quotes, divisive, end quotes, recruiting.
9 Do you recall that article?
10 A. I believe that was November 10.
11 Q. All right. I'm sorry. It's right in front of
12 me, November 10, 2000. You were quoted in that article,
13 were you not?
14 A. Yes.
15 Q. Were those quotations attributed to you
16 correct?
17 A. Not quite. The Columbus contract was directed
18 to us, as I said, via a discussion that Pat Hamamoto had
19 with the monitor. I don't know how it came back to her
20 in terms of who called her or what the discussions were
21 except that when she did talk to me, she instructed me
22 that the name that came back was Columbus and that we
23 should see whether or not we could contract with them.
24 Q. I see. Did you after having read that article
25 on or about November 10 of last year contact the
Page 116
1 reporter, Ian Lin, to suggest to him that he ought to
2 retract certain statements attributed to you?
3 A. No, no.
4 Q. Because there was a very specific statement,
5 you know, at the end that says Yoshioka, you, said Hawaii
6 officials were directed to Columbus by Ivor Groves, the
7 court appointed monitor of the Felix Consent Decree. Is
8 that a correct statement in your mind?
9 A. I don't -- what I recall anyway in that
10 conversation with him was that the monitor had made that
11 recommendation to the department, but again, I don't know
12 how it came back to the deputy superintendent.
13 Q. I see. In your mind though, whatever was
14 related to you by whomever it was, it was not a situation
15 where -- that anyone in the Department of Education was
16 directed to contract with Columbus for this?
17 A. Right.
18 Q. For these services and no one else?
19 A. Right. That was not the sense that I got, that
20 this was a mandate or requirement.
21 Q. However, when you were directed to negotiate
22 the contract though with Columbus, that was the only
23 entity with which you were going to be negotiating, was
24 it not?
25 A. Correct. Actually, what the deputy
Page 117
1 superintendent had asked, because even before the phone
2 call to the monitor, as I indicated, we had no idea, no
3 experience. We did not have any names of reputable
4 firms. We knew that we had a very tight time frame to
5 deal with, August 15 to retain a contractor. She had
6 asked me to actually look, do some research to the
7 Internet and see what else might be out there. And my
8 recollection is that when I did do that, you essentially
9 find three kinds of recruitment first. You find the firm
10 that does the job bank, teachers will send their resume
11 in, and you can look and surf and see whether or not you
12 want to pick up anybody. There are those who are
13 referral types, they will refer you a name, however, all
14 of the leg work associated with the interviewing,
15 bringing them to Hawaii, etc., is left up to the
16 recruiting agency. And then the third is a full service
17 agency, which essentially does everything from background
18 checks, credentialing checks, the interview process, the
19 screening and bringing them to the state that actually
20 needs to have those particular positions filled. When I
21 did that search, I didn't see anything that I thought we
22 would actually spend time with in terms of looking or
23 researching other companies. And so when Pat made the
24 call to the monitor, and what came back was Columbus and
25 that my sense was the monitor was all right with
Page 118
1 Columbus, we proceeded. Again, we were up against a very
2 tight time frame to have this contract in place or be
3 subject to contempt by the Federal Court, and we did not
4 want that to happen.
5 Q. Were any other -- any other persons conferred
6 with regarding recommendations such as, for example, Judy
7 Schrag?
8 A. Her name has been raised, and I actually need
9 to ask you to ask the deputy superintendent about her
10 discussions with the monitor and how Judy was involved in
11 the recommendation because I don't have first hand
12 knowledge.
13 Q. I understand, and we are going to ask those
14 questions, ma'am, but what do you recall of what was
15 related to you by the deputy superintendent?
16 A. My recollection is, and again, it would have to
17 be verified, is that Miss Schrag may have come up with
18 Columbus as a recommendation.
19 Q. Herself, you mean?
20 A. Yes. But I do not know how it came back to the
21 deputy superintendent, right.
22 Q. It could have been a recommendation by herself
23 aside from Dr. Groves, right, her meaning Judy Schrag?
24 A. It could have been, and I can't verify that for
25 you.
Page 119
1 Q. All right. But to your knowledge, Deputy
2 Superintendent Hamamoto has information relating to those
3 matters I just questioned you about?
4 A. She -- yes.
5 Q. Your answer is yes?
6 A. Yes.
7 Q. All right. Thank you. But when you did your
8 own search though, ma'am, albeit on the Internet, were
9 you looking for a full service firm, essentially?
10 A. I actually, when I did the search, I didn't
11 have any leaning one way or another. I was just trying
12 to get information. I do know that the Department of
13 Education's personnel office doesn't have the capacity to
14 put in time with anything probably less than a full
15 service organization. Clearly, the job banks haven't
16 worked well. Referral service might be an option but I
17 know that the staff are so encumbered that any attempt to
18 do anything less would probably not work. Just to add to
19 this in terms -- in addition to the time frame, the court
20 also stipulated on August 2 that we had an 85 percent
21 benchmark to meet by September 1, year 2000, meaning
22 statewide we were to have 85 percent of our teachers
23 licensed and credentialed. In addition to that, the
24 stipulation said on September 1 that we were also held to
25 a 50 percent benchmark by school. So by school, all
Page 120
1 teachers, 50 percent of them had to be licensed and
2 credentialed. At that time we were running 383 special
3 ed teachers short. In having that as a consideration,
4 when I talked to the deputy about this, we knew that we
5 would have to put serious effort into getting these
6 positions filled because we were not going to be able to
7 meet that benchmark.
8 Q. Ma'am, the matter of having requisite number of
9 special education teachers, that was not something that
10 was raised for the first time on August 2 though, was it?
11 A. I'm sorry.
12 Q. In other words, there had been this need for --
13 it had been an ongoing need for a long period of time?
14 A. Right.
15 Q. Right?
16 A. And maybe some background on that. We learned
17 the superintendent had a discussion with the monitor
18 sometime in May of 2000, May 2000, that he had -- was
19 leaning towards setting a benchmark of 85 percent,
20 because in fact, that's what the department had been
21 reporting in months past. The department had been
22 reporting 88 percent, he was leaning towards setting that
23 benchmark. He asked me to find out and verify whether or
24 not that 85 percent could be met. I then asked the
25 former personnel officer to please verify that for me in
Page 121
1 a series of E-mails that spanned two months, not getting
2 any answers. Finally, finally he returned with an answer
3 in late July that in fact 85 percent was not the right
4 number, that we were at 67 percent. My sense of it at
5 the time was it was just far too late to get that
6 stipulation changed and in fact, it was because August 2
7 is when the stipulation came down, but even then after
8 that requirement, I sat with the court monitor with
9 another person, Eric Roseff, and asked whether or not the
10 monitor would consider other kinds of teachers to be
11 counted toward the benchmark. Because in fact, what the
12 monitor was considering were only licensed and
13 credentialed teachers, meaning teachers who have been
14 trained in special ed and having passed the praxis, and
15 teachers who have been trained in special ed but had not
16 yet passed the praxis. I asked if we could attach to
17 that other teachers, teachers in training, for example,
18 who might be in their second year of special ed training,
19 teachers who might be certified in another field but who
20 have three years of special ed training, other teachers
21 in other institutes of higher education. There were
22 other categories of teachers that we thought we might
23 have a shot at and asked the monitor for his
24 consideration to add to the definition so that they would
25 be counted towards the 85 percent benchmark, and he did
Page 122
1 not feel it appropriate. So --
2 Q. When you say 85 percent benchmark, what do you
3 mean by that?
4 A. Okay. That was the benchmark set by the
5 Federal Court that as of September 1, 2000, statewide
6 that 85 percent of our special ed teachers would be
7 licensed and credentialed.
8 Q. Special ed teachers?
9 A. Yes, and we were held to that benchmark.
10 Q. But by how many teachers were you short then?
11 A. 380 some odd teachers at the time.
12 Q. Well, I guess the question I have is you mean
13 the department didn't know that they were that many
14 licensed and credentialed certified special education
15 teachers, that they were short that many?
16 A. I'm sorry.
17 Q. Over 380, you say?
18 A. Right.
19 Q. The department wasn't aware of that before
20 sometime in July or so of 2000?
21 A. The department had been erroneously reporting
22 an 88 percent compliance rate.
23 Q. Now, when you say stipulation, was there a
24 stipulation agreed upon to this, as far as this 85
25 percent was concerned?
Page 123
1 A. Yes. The parties agreed, the parties agreed
2 that this would be part of the August 2 stipulation.
3 Q. Why would the department agree to an 85 percent
4 benchmark knowing that they were 380 plus teachers short,
5 knowing it would be virtually impossible to fulfill that
6 benchmark?
7 A. Because in our attempts to get that information
8 from the former personnel officer, we weren't able to get
9 it in a timely way.
10 Q. I understand. But you did have it before
11 August though, did you not, July perhaps?
12 A. Very late July.
13 Q. Was an attempt made to go back and explain this
14 to the court formally and request relief from that type
15 of an order?
16 A. Yeah. I was -- actually my recollection is
17 that my sense of it was it was just too late.
18 Q. I see. And was that something, without
19 revealing any attorney-client matters, was that something
20 that was explained to you that it was too late to seek
21 that type of relief?
22 A. I believe there were discussions, but I don't
23 have a recollection.
24 Q. All right. Well, that benchmark has not been
25 met yet, has it?
Page 124
1 A. No. That benchmark.
2 Q. Even using Columbus it hasn't been met yet, has
3 it?
4 A. No, I'm not -- no longer there, but my
5 understanding, at least when I left, it hadn't been met.
6 Q. So there has been no contempt order issued
7 though?
8 A. No.
9 Q. Has there? Do you know why?
10 A. Do I know why?
11 Q. Yes.
12 A. No, I don't.
13 Q. Okay. All right. Now, when you negotiated the
14 contract then, the terms contained in the contract were
15 actually negotiated on by you?
16 A. Actually what occurred was when we made contact
17 with Columbus, we had several conference calls with the
18 organization to see whether or not they had the capacity,
19 whether or not they were even interested in doing it. We
20 gave them some background of what the State of Hawaii was
21 facing, and we asked them to put together a proposal,
22 which they did do. We had several conference calls about
23 our needs. I drafted an initial contract, and again, as
24 I said, we were under such tight time frames that
25 anything would have precluded us from going out to bid on
Page 125
1 this, so we had to work really, really fast.
2 Q. Well, but no -- no, there was no intent though
3 to go out to bid on this, was there?
4 A. You know, as an administrator and having
5 experience in procurement, a decent procurement process
6 takes anywhere from four to five months. And that's just
7 because you have to write the RFP, you have to know what
8 you're asking for, you have to evaluate it, you have to
9 put it out. It's a lengthy process. But given the time
10 frames that were set by court, we didn't -- we couldn't,
11 there was no way we could go out for bid.
12 Q. Well, there are reasons for such rules and
13 regulations though relating to procurement, aren't there?
14 A. Absolutely.
15 Q. And in this case they were completely
16 disregarded?
17 A. Well, no, actually they weren't. There was
18 another stipulation signed by the court July 21, I
19 believe is the date, which granted certain powers to the
20 director of Department of Health and to the
21 superintendent. And one of those was in fact the ability
22 to waive 103D and 103F, and so the department was not
23 violating State law in order to meet that deadline.
24 Q. Now, I understand that, but that order
25 notwithstanding, there still should be some safeguards in
Page 126
1 place to make sure that whoever contracts with a provider
2 does it in a fashion that's fair to the State?
3 A. Absolutely. The department though, I need to --
4 Q. And that's why you normally have more than one
5 provider that you might be looking at rather than just
6 one who knows they're the only show in town and you've
7 got to negotiate with them, you've got to contract with
8 them, it sort of puts the person in your position in a
9 very difficult position, does it not?
10 A. Yes. But given the time frames and, you know,
11 a direct department position that we were not going to be
12 held in contempt for missing a deadline, we had to get
13 that contract executed.
14 Q. The Columbus didn't -- or didn't warrant you
15 that you would not miss the deadline, did it?
16 A. I'm sorry?
17 Q. Columbus Educational Services in contracting
18 with the State, didn't contract that they would get these
19 teachers for you by the required date?
20 A. No. No.
21 Q. So that they were not assuring you anything in
22 terms of not meeting or meeting that deadline?
23 A. No. Right. The stipulations were quite
24 separate, and they were interrelated but quite separate.
25 The August 15 deadline was to retain a mainland
Page 127
1 recruitment firm, so that we had no choice but to do
2 that. The 85 percent benchmark came as a measure.
3 Q. I understand. I understand, but obtaining the
4 recruitment firm though, again, there was apparently, for
5 whatever reasons, there was no intent to put it out to
6 bid anyway, you were only going to go to one party or one
7 company and negotiate with them and perhaps get the
8 services.
9 A. Given the time frames, that's correct.
10 Q. All right, and that what -- to your knowledge,
11 the only source of information that the department
12 received which organization or entity to go to was
13 information given to the department either by Dr. Groves,
14 Dr. Schrag or both of them, is that a fair statement?
15 A. Correct.
16 Q. All right.
17 A. My understanding, that's correct.
18 Q. All right. Now, when you negotiated with
19 Columbus, who did you negotiate with?
20 A. Primarily with a person named Richard Ronder.
21 Q. He's CEO?
22 A. Yes.
23 Q. And when you say negotiated, perhaps you can in
24 a nutshell tell us how you negotiated the contract?
25 A. As I indicated before, we had several
Page 128
1 conference calls with Columbus over the phone in the
2 deputy's office, and again, we explained what it was we
3 needed. We asked him to put a proposal together, which
4 they did do and they sent it to us for review, and
5 essentially the discussions with them had to do with why
6 do you think -- tell us about your proposal, what makes
7 this a successful proposal, what are the components, how
8 are the numbers derived, and there was a lot of -- there
9 was a lot of back and forth discussions about this
10 proposal in seeking to see whether or not this was going
11 to be -- this was going to work for the State.
12 Q. And were these discussions -- discussions of
13 course, I'm sure over the telephone, but was there also
14 correspondence or E-mail messages, memos?
15 A. There are a lot of those in the file with the
16 department, yes.
17 Q. So they are there, as far as you're concerned
18 when you left, all of that documentation, if they existed
19 was still there when you left?
20 A. Yes.
21 Q. And if one were to look, look in the
22 department's files for those documents where in your
23 opinion would they be kept?
24 A. They're housed with Josephine Yamasaki, who's a
25 staff person in personnel.
Page 129
1 Q. All right.
2 A. So you can -- she will have them.
3 Q. All right. Now, how was the amount of the
4 contract agreed upon? The number 100 million dollars was
5 used earlier, I think, because under compensation if you
6 look at the three fiscal years involved, they total about
7 100 million?
8 A. I'm not sure if the committee is aware, but
9 that contract was amended down.
10 Q. I understand. I understand that.
11 A. Okay. Okay.
12 Q. But starting with 100 million, there is some
13 reason why that was reached, right, those numbers?
14 A. 100 million wasn't a magic number. Essentially
15 what we said was we need 383 teachers. If we were to
16 take -- and we had some discussions with the company
17 about what they thought they could deliver every month,
18 and I think it averaged something between ten and 14.
19 I'm trying to recall how many referrals we would like to
20 see per month, and that drove the costs, basically.
21 Q. That's how you came up with 14 million plus for
22 the first fiscal year and then 41 and 42 million for
23 subsequent fiscal years?
24 A. Right. I think it was 17 the first year.
25 Q. I'm sorry, 16?
Page 130
1 A. 16.5 or --
2 Q. You're right. Now, those numbers were amended
3 down subsequently, as you said, right?
4 A. Yes, that's correct.
5 Q. And that was because Columbus could not perform
6 on their end to provide the number of teachers that you
7 thought they could perform and they thought they could
8 produce?
9 A. Actually, no. The reason for the amendment was
10 that when we first went in, it was based on the whole
11 need, the 383 some odd teachers. We didn't have good
12 information school by school what it would take to meet
13 the 85 percent benchmark. When we got that information,
14 which was sometime in late September, October, we were
15 able to identify by school, particularly the outer
16 islands, which schools did not meet the 50 percent
17 benchmark and the 85 percent benchmark, and because the
18 stipulation indicated or said on there that we should
19 focus on the hard to recruit areas, for example, Kohala,
20 Ka'u, Molokai, Lanai, that we amended the contract down.
21 We were also hoping that the department in its own
22 efforts through fall and spring recruitment might be able
23 to make up some of the difference. So that was really
24 the -- where we were going with that.
25 Q. So what was it amended down to then?
Page 131
1 A. We amended it to 138 special ed positions and
2 those were all limited to the outer islands. My
3 understanding is the contractor has met that.
4 Q. What was the contracted amount though that was
5 amended down?
6 A. I have the contract. Can I look or --
7 Q. Yeah, please.
8 A. Sure.
9 Q. I might have it here, too, I'm not sure. What
10 I'm looking at suggests that the first fiscal year was
11 amended down to seven million two, the next fiscal year,
12 '01-'02 to 16.3 and '02-'03 to 16.5.
13 A. Right.
14 Q. To your knowledge, when you left the
15 department, that compensation amount was still in
16 existence?
17 A. Yes.
18 Q. Now, I notice from reviewing the agreements
19 that the Attorney General's office did not pass on these
20 contracts.
21 A. Did not sign the contracts?
22 Q. Did not sign onto as they normally would sign
23 on?
24 A. That's correct.
25 Q. Right?
Page 132
1 A. That's correct.
2 Q. Normal procedures required the department to
3 have the Attorney General's office review and approve at
4 least as to form any agreement that was entered into,
5 right?
6 A. We had -- we were in consult with the Attorney
7 General's office as we were drafting the contract. And
8 my recollection is that we did send drafts. I know that
9 a formal AG signature is not required. I mean it's
10 really up to the service organization.
11 Q. I see. And you chose not to have that, have
12 the formal approval?
13 A. Yeah. We were just under such tight time
14 frames to get this contract executed that we did not go
15 through the formal route of having them sign it, but they
16 were involved.
17 Q. Well, when you say you were so much in a rush,
18 how long would it take for them to sign it if in fact
19 they were involved all along the way?
20 A. We were -- my recollection was we were down to
21 the wire in finalizing this thing and working with the
22 mainland, sending drafts back and forth, and I remember
23 it was really really down to the wire.
24 Q. And every one of those drafts was passed on by
25 the Attorney General's office?
Page 133
1 A. No. I think there were a couple of drafts that
2 I shared with the Attorney General's office just to make
3 sure that we were on board. She was also very strong in
4 her indication that we had to meet the deadline, and so
5 that's what we were working against.
6 Q. So who made the decision then, who made the
7 specific decision not to have the Attorney General sign
8 on to this contract?
9 A. I don't think there was a discussion about
10 whether or not we should or shouldn't.
11 Q. Obviously somebody made the decision though
12 because it's not there?
13 A. Right. I just don't think we did.
14 Q. You did or was it someone else?
15 A. I can take responsibility for that. We were
16 trying to get the contract out. I did not go to the
17 Attorney General and say please sign this. I was
18 comfortable knowing that they had reviewed it and that
19 they were on board with us.
20 Q. The contract in pertinent part, as far as I'm
21 concerned, provides for Columbus to open up offices on
22 the mainland for recruiting, right?
23 A. Yes.
24 Q. And all the expenses of that office, the lease
25 rental, overhead if there might be any, the personnel
Page 134
1 that would be manning that office, was to be paid by the
2 State of Hawaii, right?
3 A. Yes.
4 Q. Now, what would happen to all the equipment
5 that was purchased or anything of that nature that had to
6 be purchased and could not be leased, for example, and
7 returned? To whose benefit were those assets to inure?
8 Who was to keep those assets after this assignment was
9 done?
10 A. Yeah, in normal State contracts, the provision
11 is that it is returned to the State. We did not have
12 that in this contract.
13 Q. So Columbus would get that, would keep it, I
14 assume?
15 A. Without provision, I would say yes.
16 Q. Why was that agreed upon?
17 A. Again, we could not -- the time frame was so
18 rushed, I don't think that we had foresight to think
19 about all the provisions and that clearly would have been
20 one of them.
21 Q. The Attorney General's office didn't raise that
22 issue with you upon their review of the several drafts
23 that were sent to them?
24 A. No.
25 Q. Did the Attorney General's office raise to you
Page 135
1 issues, for example, of liability for these teachers that
2 were going to be hired by Columbus?
3 A. No.
4 Q. Nothing was said about that?
5 A. Not to my recollection.
6 Q. For example, Columbus hires these teachers and
7 brings them to Hawaii, right, and they give them travel
8 allowance to come here and look at the place to see if
9 they want to be here, first of all, right?
10 A. Right, there's a process.
11 Q. And they get paid once they come here a salary
12 plus benefits, right?
13 A. Right.
14 Q. And they get living allowances?
15 A. It's up -- it's between Columbus and the
16 teacher in that negotiation between the teacher.
17 Q. They can be given living allowances for how
18 long, ma'am?
19 A. It's up to Columbus. My understanding is that
20 the Columbus folks wanted to contract with these teachers
21 for a period of three years.
22 Q. So -- but when you say it's up to Columbus
23 though, who pays for those?
24 A. The State pays for that.
25 Q. So that the State gave Columbus in a way the
Page 136
1 right to negotiate all of these benefits but the State
2 would have to pay for it?
3 A. Right, and at the time, I think what we need to
4 understand is that the teacher shortage is a national
5 shortage, that when I was looking at what was going on in
6 other states, indication was that in special ed math and
7 science, that we were going to see a two million -- the
8 State would be looking for two million teachers over the
9 next decade, and so what you have is this market
10 phenomenon of states competing with states to get
11 teachers. They're robbing each other of teachers.
12 Q. That may be. What happens though in terms of
13 cost then, cost becomes -- or it's not an object anymore,
14 is it?
15 A. Well, the problem is, yeah, the problem is the
16 states are offering -- and I was actually amazed at the
17 kinds of incentives states were offering, things like
18 housing allowances, home grants, down payments for homes.
19 Q. Car allowances?
20 A. Car allowances.
21 Q. Were you offering that here in Hawaii, all of
22 those things you just mentioned?
23 A. No, not -- who is we? I'm sorry.
24 Q. The State of Hawaii.
25 A. To our own teachers or to --
Page 137
1 Q. No, I'm sorry.
2 A. Oh.
3 Q. Was Columbus offering to prospective special
4 education teachers down payment on homes?
5 A. No. I don't believe that's true. But they did
6 have the latitude --
7 Q. To do that?
8 A. No, no. They did have the latitude to offer
9 incentives that would bring teachers here.
10 Q. I understand. But what constraints did they
11 have then, if any?
12 A. There was a dollar cap in terms of the amount
13 of dollars per teacher, and I think --
14 Q. How much was that, ma'am?
15 A. That was 100,000.
16 Q. To be used in any way that they saw fit?
17 A. No. Essentially the way that broke out was 32
18 to 42 percent or 32 to $42,000 would be salary depending
19 on the experience of the teacher. Benefits run 30
20 percent for Columbus. There was a one time $10,000
21 relocation and the rest of it were the incentives,
22 whether it be housing allowance, whether it be moving,
23 relocation, that was between the teacher and Columbus to
24 decide.
25 Q. But Columbus would decide that on its own but
Page 138
1 it would be paid by the State?
2 A. Yes.
3 Q. Was there any way for you to monitor whether or
4 not they were administering that fairly?
5 A. No.
6 Q. Now, once the teacher got here though, what was
7 the understanding then as to whether or not they would be
8 involved with the union, for example?
9 A. What we worked out was that-- and Columbus made
10 this clear in their presentation, because we knew that
11 this was going to be a very unpopular contract to
12 administer, and that's very understandable, that they
13 wanted to mirror Hawaii teachers as closely as possible.
14 That is whatever union rights or whatever union benefits,
15 i.e., sick leave, vacation, Columbus would adhere to,
16 that the teachers would have the same sign in sign out
17 procedures as regular teachers, participate in
18 professional development along the same lines that the
19 teachers were, so those types of things it was very clear
20 we wanted to make sure that, if you will, the word is as
21 much harmony as we could possibly effect.
22 Q. Sure. But if you got a total package though of
23 100,000, that's a lot more than the typical special
24 education teacher hired in Hawaii by the DOE would get
25 paid though, right?
Page 139
1 A. Yes, it was.
2 Q. I mean much more?
3 A. Yes, it was.
4 Q. So that how was that to be resolved with the
5 union at some point when I assume the consent decree
6 would be lifted and then you've got these teachers
7 getting paid total package much more than a typical
8 special education teacher here?
9 A. Well, first thing is that in our discussions
10 with HSTA, clearly they were not happy about the State
11 moving to contract with Columbus, and that's
12 understandable, clearly. But they also understood the
13 State's position, the court order, and understood that we
14 really didn't have a choice in this matter. The second
15 thing I want to say is that even for our department, and
16 I think we've been on record as saying this, that
17 mainland recruitment is not the long term fix, that
18 really the State should be looking towards building its
19 own capacity, which it hasn't been able to do.
20 Q. I understand. I understand what you're saying,
21 but albeit that it's not a long term fix, what happens
22 when the fix ends? In other words, what happens when the
23 consent decree is lifted, you got these teachers being
24 paid a total package of $100,000, I assume you have an
25 agreement with Columbus that the State would take them
Page 140
1 over?
2 A. No. Actually the way it works is they're under
3 contract with Columbus. They're contracted teachers.
4 The hope is that we can employ them in our own system.
5 The hope is that the state will build enough capacity to
6 be able to hire its own teachers behind these vacancies,
7 but that capacity doesn't happen overnight.
8 Q. I understand.
9 A. Obviously. And so we really do hope to not be
10 dependent on mainland recruitment.
11 Q. So how long do you hope to be -- strike that.
12 How long was it that you were anticipating you'd have to
13 rely on Columbus for until you could get your fix?
14 A. The shortest time frame just taking a teacher
15 who might -- or person going through college degree
16 programs, four years. So we even knew that that was
17 going to be tight or hard to meet.
18 Q. So you'd have to contract with Columbus for at
19 least four years, at least?
20 A. No, the contract is for three years.
21 Q. Two?
22 A. Three years.
23 Q. Three years?
24 A. The contract is for three years, the State
25 would have to assess where it was, or whether it -- where
Page 141
1 it is in that time frame, see what its efforts are, have
2 been to be able to hire its own teachers because that's
3 the optimum solution, and see whether or not there's a
4 need to go with Columbus or something like Columbus in
5 the future.
6 Q. Now, what was Columbus? What did they benefit --
7 how did they benefit from this contract if the State paid
8 for all of the expenses they incurred, all of the
9 overhead they incurred, even an office here in Hawaii,
10 then they must have gotten some fee or some commission
11 over that amount?
12 A. No. The way we did the test for reasonableness
13 was we looked at the tracks or their proposal, divided it
14 into I think four tracks, and we looked at the management
15 costs to try to determine whether or not the percent of
16 their management cost was reasonable.
17 Q. I see. They were charging a management fee?
18 A. Right. The management fee though included a
19 bunch of things. It included, the way they laid it out,
20 all of the recruitment expenses, meaning if they had to
21 hire recruitment people, to go and interview folks in the
22 country.
23 Q. Who paid for that?
24 A. The State did. This is part of track, the
25 track one. It paid for any advertising, marketing, any
Page 142
1 kind of mass mailing. I think I remember in a report
2 last February they mass mailed to 120,000 teachers in the
3 states.
4 Q. Ms. Yoshioka, just one minute. I understand
5 what you're saying. My understanding is all of these
6 types of expenses that were incurred, recruitment
7 expenses, personal expenses related to finding these
8 teachers, any premises that were leased and/or purchased
9 were going to be paid by the State of Hawaii?
10 A. Yes.
11 Q. Completely?
12 A. As they related --
13 Q. And Columbus paid nothing?
14 A. Columbus paid -- as they related to the
15 contract costs, yes.
16 Q. Nothing?
17 A. Yes.
18 Q. So did they retain, for example, if you had a
19 package per person of 100,000, if, for example, they were
20 able to contract with someone to get whatever they needed
21 to get, the compensation, the benefits and all of that,
22 totalling 80,000, did Columbus then keep 20,000?
23 A. Yes, and if they were to spend more then they
24 would absorb the loss.
25 Q. I see. Do you know if they ever spent more
Page 143
1 than $100,000 per person?
2 A. No. No.
3 Q. I see. So that was Columbus' benefit, but
4 nonetheless, any other costs that was incurred, any other
5 expense would be paid by the State of Hawaii?
6 A. Yes.
7 Q. Did the Attorney General's office question
8 that, the feasibility, desirability of a contract like
9 that where the State footed every expense possible and
10 the provider took no risk essentially and only
11 benefitted?
12 A. The Attorney General's review was on the Felix,
13 was really the concern was about meeting the court
14 stipulation. We didn't have discussions about the
15 business side of it.
16 Q. Well, but the business side of it was an
17 important side of it, though, ma'am, wasn't it?
18 A. I agree.
19 Q. So that the Attorney General's office gave no
20 opinions in that regard regarding this contract that was
21 totally funded by the State, and seems to me no risk
22 taken by Columbus, so that they would have -- you would
23 have no recourse against them if they didn't perform,
24 right, no recourse?
25 A. No, that's not true.
Page 144
1 Q. What recourse would you have?
2 A. We inserted extra protection for the State.
3 Q. For what, ma'am?
4 A. In terms of being able to terminate with or
5 without cause.
6 Q. I understand, but they really took no risk
7 though, if they did not get you one teacher, for example,
8 you couldn't bring a breach of contract lawsuit against
9 them, could you, because they were not contracting to
10 provide even one teacher?
11 A. That's correct.
12 Q. From their standpoint in terms of being held to
13 that contract, right?
14 A. Right.
15 Q. I have no other questions. Thank you.
16 CO-CHAIR SENATOR HANABUSA: Thank you.
17 Members, we will begin our questioning with Vice-Chair
18 Kokubun followed by Vice-Chair Oshiro.
19 BY VICE-CHAIR SENATOR KOKUBUN:
20 Q. I want to just follow up on the AG's role
21 again.
22 A. Sure.
23 Q. Thank you. Ms. Yoshioka, you indicated that
24 the AG reviewed the various drafts of the contracts as
25 they were coming through?
Page 145
1 A. That's my recollection, yes.
2 Q. Okay. And did they provide comment in terms of
3 how to tighten up, I use that term tighten up the
4 contract in terms of the State's either exposure and/or
5 responsibility?
6 A. No. You know, to be fair to the Attorney
7 General's office, the discussions with them were really
8 about meeting that benchmark, letting them know and
9 apprising them of where we were. Because clearly, for
10 them, the issue of contempt was in the front. Having a
11 stipulation that said August 15 retain the mainland
12 recruitment firm, that was the first priority.
13 Q. I see.
14 A. To be honest.
15 Q. So the AG's goal in reviewing these contracts
16 really was not to look at the exposure of the State, it
17 was primarily to look at it from the perspective of were
18 we able to meet the --
19 A. Right. The AG that I worked with is in the
20 Felix compliance office.
21 Q. And who is that?
22 A. Her name is Holly Shikata.
23 Q. How long did this review process go on for this
24 contract?
25 A. Well, again, after we got recommendation by --
Page 146
1 through Pat Hamamoto, I did anyway about Columbus, we had
2 to set up several conference calls, and so there was a
3 lot of discussions over the phone about this contract,
4 how we would proceed. We had to have the retaining
5 letter by August 15, and we were advised by the Attorney
6 General that we needed to have the contract executed by
7 September 1. So we only had a very short time frame, a
8 window period to get this thing up and running. So the
9 discussions were about where we were with the contract,
10 what -- where we were in the negotiation, so to speak,
11 how close were we and remember, department, we've got to
12 meet the benchmark, so that was really where the
13 discussions were.
14 Q. Okay. With respect to the cost on that, the
15 cost benefit analysis perhaps of this contract, who was
16 providing that kind of input?
17 A. Actually I looked at it. I looked at the
18 tracks, I did some math in terms of how much they were
19 charging for management costs versus salaries just to get
20 some idea about whether or not that was a reasonable
21 percent. And my recollection was, in the first contract
22 anyway, it was around 14 percent for management costs,
23 which included all of the recruitment efforts, the
24 staffing, the advertising, etc. And I didn't think that
25 was unreasonable.
Page 147
1 Q. Did you have any comparative analysis done on
2 that or did you --
3 A. No. Yeah. Yeah. We were -- we were just so
4 new at having to do a contract with a recruitment firm
5 that I don't think we would have had that kind of
6 comparison.
7 Q. Okay. So what I'm hearing and, you know, I
8 don't want to necessarily oversimplify this, but
9 basically is that the goal really was to meet the
10 compliance, the consent decree compliance?
11 A. Yes.
12 Q. Benchmarks, and really was -- that was the
13 primary issue and --
14 A. Yes.
15 Q. -- with respect to the cost benefit analysis?
16 A. Right, and having -- having the other
17 benchmark, the 85 percent benchmark effective September 1
18 that we knew we had to get teachers in as quickly as
19 possible.
20 Q. Okay. I just wanted to follow up on one other
21 area, and that's -- I think Mr. Kawashima asked you also
22 about the role that Judith Schrag played in this?
23 A. Yes.
24 Q. And your statement about that was?
25 A. I can't -- I can't give you a first hand
Page 148
1 knowledge about that. And I do know, as I said, I
2 indicated I -- I talked to Pat Hamamoto about the fact we
3 that didn't have experience with the mainland recruitment
4 firms and that she said she would call or initiate a call
5 to the monitor, which I know she did do. What came back
6 to her, I cannot -- I don't have first hand knowledge
7 about, but my recollection was I think Miss Schrag did
8 have some input.
9 Q. Okay. Dr. LeMahieu, did he have any input?
10 A. Not that I know of.
11 Q. So this was something strictly that you and at
12 that time Deputy Superintendent Hamamoto made the
13 decisions on?
14 A. Yes.
15 Q. Thank you very much.
16 VICE-CHAIR SENATOR KOKUBUN: Co-Chair,
17 Thank you.
18 CO-CHAIR SENATOR HANABUSA: Thank you.
19 Vice-Chair Oshiro followed by Senator Slom.
20 VICE-CHAIR REPRESENTATIVE OSHIRO:
21 Thank you, Co-Chair Hanabusa.
22 BY VICE-CHAIR REPRESENTATIVE OSHIRO:
23 Q. I'm not sure if I have the same copy of the
24 Columbus contract that you do, but I wanted to ask you a
25 question about it.
Page 149
1 A. Sure.
2 Q. In our copy, the pages aren't numbered, but if
3 you look at the upper right hand corner there's a
4 facsimile pagination?
5 A. Okay. Are you looking at the first contract?
6 Q. The first contract.
7 A. The first one.
8 Q. Okay. The original one.
9 A. Okay.
10 Q. And then the last fax -- page number is page
11 36. I see. And then about -- well, I'm sorry, I guess
12 it would be page 37, facsimile page 37. It's a table
13 number three, professional services, having a breakdown
14 for how much you're going to be paying the special
15 education teachers and the school counselors?
16 A. Right. I don't have a numbered page 37, but I
17 think I know where you are.
18 Q. Okay. Now, in looking at that earlier, when
19 Mr. Kawashima was asking you questions, you said that
20 there was a cap of 100,000. In looking at this though, I
21 see a different figure, which is 112,125.
22 A. Right, it is 112.
23 Q. Okay. And looking down further, there's also a
24 breakdown for 10,000 for the relocation costs, is that
25 correct?
Page 150
1 A. Right, that was a one time.
2 Q. Okay.
3 A. Right.
4 Q. Okay. So in essence, after that there's
5 $102,125 that I guess Columbus is going to be receiving
6 and out of that that's where they'd be paying the salary
7 and the benefits?
8 A. The salaries, the benefits and any other
9 incentives that they needed to negotiate with that
10 teacher to come to Hawaii.
11 Q. Okay. But as I understand it, you stated that
12 the maximum salary, I guess they would be paying a
13 teacher is about 42,000, is that correct?
14 A. That was the range that we got from Columbus
15 because we'd asked -- we needed to know what they were
16 thinking about in terms of compensating the teachers.
17 Q. Okay. And then if that's the maximum, and even
18 at a 30 percent of the 42,000, that only comes out to an
19 additional 12,600.
20 A. Right.
21 Q. So adding the 12,600 to the 42,000, I only get
22 a maximum salary or -- and benefits being paid to the
23 teacher of 47,525.
24 A. You're adding it to the 42 or the 32?
25 Q. Well, I'm sorry, the 42 plus the 12 equals --
Page 151
1 A. 57.
2 Q. 57?
3 A. Right.
4 Q. Okay. But the 57 from the 100 to 125 leaves
5 about $47,000 --
6 A. Right.
7 Q. -- that's unaccounted for as you're saying in
8 the incentive?
9 A. Right. The incentives that Columbus may need
10 to negotiate with the teacher. Remember now, the thing I
11 have to probably impress upon is it is expensive.
12 There's no question about it, and understandably a
13 concern. The national dynamics where the states are
14 robbing other states for teachers and offering
15 incentives, and --
16 Q. But --
17 A. And so to be competitive, to be competitive
18 with other states to have some success of having those
19 teachers move to rural areas, we knew it was expensive
20 but we also thought that that was the best way to get
21 teachers here.
22 Q. Okay. But as I understand it, you said that
23 pretty much the discretion for whatever incentives they
24 wanted to provide fell upon Columbus. Was there any real
25 oversight by the department in terms of what kind of
Page 152
1 incentives or accounting for those incentives, because I
2 mean the way I'm looking at it, there's $47,000 per
3 teacher that's sort of unaccounted for, so is there any
4 auditing or billing system by which you would be assured
5 where this money is going?
6 A. Yeah. The billing system was such that we
7 asked for an itemized billing. The incentives were not
8 part of that, although in the contract there is a
9 provision for audit of the contractor.
10 Q. Okay. Just briefly, I wanted to get into a
11 totally different area, and it's just because I saw your
12 name mentioned in some other information we had. On or
13 about July 7 of 2000, do you recall going to a
14 presentation by Na Laukoa in regards to targeted
15 technical assistance?
16 A. Yes.
17 Q. Okay. And in looking at the information we
18 have, is it true that you had actually prepared some kind
19 of assessment evaluation sheet for the presentation in
20 terms of whether you think that these -- this provider
21 can be qualified or should be offered the contract for
22 targeted technical assistance?
23 A. I did not make anything in writing.
24 Q. Okay. But do you recall having any sort of
25 impressions or assessment after that presentation?
Page 153
1 A. Yes. I did.
2 Q. And what was your overall assessment at that
3 time?
4 A. Actually can I give you some background on
5 this?
6 Q. Sure.
7 A. Or do you want me to go ahead? Okay. The
8 superintendent, then superintendent had asked if I could
9 join a panel, a committee, if you will, to evaluate a
10 provider that was being considered for targeted technical
11 assistance. And that was calendared on my calendar, and
12 so I went to the meeting, which was the July 7 meeting.
13 Na Laukoa was represented by Miss Stocksdale and at least
14 three people, one that I remembered, Dr. Kimo Alameda,
15 and a couple of other folks in the mental health
16 profession. I was there for the presentation. After the
17 presentation -- actually the superintendent caught me in
18 the hallway as I was leaving the meeting, and we had a
19 discussion about whether or not I thought Na Laukoa could
20 do the job. And what I said was that I was okay with the
21 folks that presented the program side, meaning they were
22 articulate about school based mental health, about having
23 experience in outpatient mental health services, and that
24 I thought they could effectively work with the schools in
25 designing the new school based mental health plan, the
Page 154
1 transition. I said though that I had serious concern
2 about Ms. Stocksdale's administrative ability to
3 negotiate the contract. And that was my input. He
4 didn't ask for written input, I just gave him verbal
5 input.
6 Q. Okay, and just one more follow up question.
7 Where did your concerns over Miss Stocksdale's
8 administrative abilities, what was the basis for that
9 concern?
10 A. When the presentation was made, there was a lot
11 of discussion by her staff, her core staff about the
12 program itself, about how they envisioned looking at or
13 providing the targeted technical assistance to the 14
14 complexes, that they would look at needs assessment, they
15 would look at what kids were getting, they would look at
16 what kids needed, and so there was a good discussion
17 about how they would go about doing that. What I didn't
18 get from Ms. Stocksdale was any kind of participation in
19 that discussion. She opened the discussion and she
20 talked about how Na Laukoa's name was developed, what it
21 meant in the Hawaiian term, and from that perspective
22 what the goal or the mission of the company was. But I
23 didn't hear the other parts that I thought would be
24 relevant to an administrator's knowledge.
25 Q. Thank you very much.
Page 155
1 CO-CHAIR SENATOR HANABUSA: Thank you.
2 Senator Slom followed by Representative Ito.
3 SENATOR SLOM: Thank you, Co-Chair.
4 BY SENATOR SLOM:
5 Q. Good afternoon.
6 A. Hi.
7 Q. Following up on what Representative Oshiro just
8 asked about, the billing system --
9 A. Yes.
10 Q. Who actually developed the billing system?
11 A. What we agreed to was, and it's in the
12 contract, a line item bill from Columbus to be provided
13 to us on a bi-monthly basis, I assigned a staff person to
14 review invoices, the same staff person tracked the actual
15 names of teachers that were coming over so that we knew
16 how many teachers were actually being referred out and we
17 actually coordinated that. The personnel office was the
18 hub, so that whenever Columbus would come up with a
19 teacher's referral name, that we would in fact arrange
20 the interview with the principal so we knew at all times
21 which teachers were coming through our door, what
22 expenses we could anticipate in the way of a billing.
23 Q. So you had, even though you assigned a clerk to
24 do that, did you have the overall responsibility and the
25 knowledge of bills?
Page 156
1 A. She wasn't -- the person is not a clerk, the
2 person is a professional. The person has budget
3 background, experience in fiscal matters. And so her --
4 her job is to basically audit the bills as they come
5 through and to make sure that what we were being charged
6 for was in fact our understanding of the number of
7 teachers that in fact were here in Hawaii being
8 interviewed and also being hired, for that matter.
9 Q. You mentioned that there was an audit
10 provision, however, in the contract?
11 A. Yes. Yes.
12 Q. Did you ever consider utilizing it?
13 A. The audit -- I left before the end of the first
14 year and so I think you -- you might want to ask the
15 department where they are with that, but the audit
16 provision, if I recall correctly, says that the
17 department has 60 days after the audit period, which I
18 think is after the end of each fiscal year to conduct an
19 audit. I think they would have better -- a better answer
20 in terms of where they were with that.
21 Q. Okay. And as you indicated at the beginning of
22 your testimony, there were in fact several revisions to
23 the contract?
24 A. Several drafts, yes.
25 Q. And you were -- you were the person, the
Page 157
1 primary person that was involved in the negotiations with
2 those changes?
3 A. Yes. Uh huh.
4 Q. You also mentioned that HSTA was not happy --
5 A. Right.
6 Q. -- with the proposal?
7 A. Right.
8 Q. Did you deal with HSTA or --
9 A. Yes.
10 Q. You did?
11 A. Uh huh.
12 Q. Was there any additional agreement or quid pro
13 quo or anything else that was given to them?
14 A. In terms of -- I'm sorry, I'm trying to
15 understand the question.
16 Q. Well, I'm sorry. To try to alleviate some of
17 their unhappiness?
18 A. No. I mean they clearly were, and
19 understandably so, concerned about the effect of having
20 recruited teachers sharing school space with other
21 teachers. But there was a benchmark, there was another
22 benchmark that said that we needed to implement
23 recruitment and retention incentives for our own
24 teachers, and so what we did was we worked very closely
25 with HSTA in working meetings and developing those
Page 158
1 incentives, so for example, one was a hard to recruit
2 incentive. We had a $10,000 return to SPED incentive for
3 existing teachers, so we worked with HSTA, too, on that
4 benchmark.
5 Q. Did -- but there were no other representations
6 or agreements or anything?
7 A. No.
8 Q. Including discussions about the forthcoming
9 contract negotiations?
10 A. Insofar as Columbus was concerned?
11 Q. No, in terms of the regular HSTA contract?
12 A. No, because at that time it was just -- it was
13 early, it was before the negotiations had actually
14 started.
15 Q. Okay. And finally, Ms. Yoshioka, why did you
16 leave the DOE at the time that you did?
17 A. I left for a part-time job so that I would have
18 more time for my daughter. She's only eight and taking
19 lots of my time. And there were many times when I
20 couldn't be home on time and I decided well, you know,
21 I've got to make a decision about what's more important.
22 Clearly she is, so I made the decision to go to a
23 part-time job and that's where I am.
24 Q. I understand that. Thank you very much.
25 SENATOR SLOM: Thank you, Madam Chair.
Page 159
1 CO-CHAIR SENATOR HANABUSA: Members, we
2 have been going for over an hour. We have to give the
3 court reporter a break. We are going to enforce the five
4 minute rule, so we ask that you please come back in five
5 minutes and at that time we will begin with
6 Representative Ito. Thank you very much.
7 (Recess.)
8 CO-CHAIR SENATOR HANABUSA: Members, we
9 are reconvened. We will begin with Representative Ito
10 followed by Senator Matsuura.
11 REPRESENTATIVE ITO: Thank you, Madam
12 Co-Chair Hanabusa.
13 BY REPRESENTATIVE ITO:
14 Q. Good afternoon.
15 A. Hi.
16 Q. I just have a couple questions. You know, you
17 mentioned that we were 380 special ed teachers short?
18 A. Right.
19 Q. About how many teachers do you have right now
20 in the DOE that have special ed certification but not in
21 special ed?
22 A. You know, since I've left the department I
23 couldn't give you accurate numbers --
24 Q. Well --
25 A. -- but back then we had 2,100 special ed
Page 160
1 teachers, at 67 percent compliance rate that would have
2 been about 1,700 teachers, and 85 percent would get us to
3 the 383. How many of those were actually certified in
4 special ed?
5 Q. Yes.
6 A. That would have been the 1,700 number, meaning
7 licensed and credentialed in special ed, right.
8 Q. So couldn't the department, you know, come up
9 with a plan where you can give the same incentives as the
10 Columbia people?
11 A. Yeah. The department did -- there was a
12 benchmark that required the department to come up with
13 incentives for existing teachers, and the department did.
14 The document you may want to ask the department for is
15 called the FRP, Felix response plan. I don't have a
16 final copy of that, but it lays out all of the incentives
17 that were worked out with -- in collaboration with HSTA.
18 Q. What's that PERK, P-E-R-K?
19 A. FRP, F-R-P, Felix response plan. If you say
20 FRP, they will clearly know what you mean by FRP.
21 Q. Okay. You know, basically right now we have
22 two personnel department, basically, one is Columbia and
23 one is DOE. How come the DOE people can't handle this
24 now?
25 A. You know, I actually have a good analogy about
Page 161
1 that because it is something that the department should
2 clearly be able to do, clearly. When I first arrived at
3 the DOE, I made it a point of visiting all of my staff,
4 meeting them and just seeing what kind of work
5 environment they were in, and what impressed me the most
6 was the paper. There is paper piled, I mean accounting
7 paper piled in personnel, personnel folks writing
8 information about positions on three by five cards. It
9 astounded me that for a department, we had 40,000 people
10 on payroll at any one time, didn't have a state of the
11 art HR system, because clearly that's where these
12 deficiencies are in any department, is having automation.
13 And one of the things I did was I asked the
14 superintendent for support in developing an HR system
15 because I clearly knew that without it the department
16 would never be able to get to things like it should be
17 getting to, which is recruitment efforts and having the
18 time and the wherewithal to do it. He found some Federal
19 money, the legislature granted, I think it was three and
20 a half million in last session, and the department will
21 have a time and attendance study, a time and attendance
22 system out at the school level in December. And so much
23 progress has been made in terms of bringing that whole
24 office into the 21st century, but to answer your
25 question, they don't have the capacity. I have lived it,
Page 162
1 but clearly you're right, they should able to do it.
2 Q. Is it because of the culture that won't change?
3 What do you mean?
4 A. I just think that in my own assessment of the
5 department, is that there wasn't enough attention paid to
6 the administrative needs that, you know, it grew. It's a
7 large department with lots of needs and the
8 infrastructure, the administrative stuff was just never
9 attended to. When I got there, I was also astounded to
10 find out that they were two years behind in calculating
11 leave balances, because they don't have the capacity to
12 do that. So you know, there are many things that you
13 would hope the department could attend to, and
14 recruitment is certainly one of them because they should
15 be in the business of recruitment, but I can clearly say
16 just based on my being there, I know that they could not,
17 there was no capacity for it.
18 Q. You know, you mentioned recruitment. I'm just
19 looking for a time card, but you know, you mentioned
20 recruitment. Who makes up the recruitment team?
21 A. I'm sorry, the recruitment team?
22 Q. Who makes up -- yeah.
23 A. For the State?
24 Q. Yes.
25 A. Oh, okay.
Page 163
1 Q. You know, to go to the mainland and --
2 A. Yes. The practice has been that the personnel
3 office pros, personnel regional officers would go, and
4 they would take principals, and the principals would go
5 because the principals have the best sense of need in
6 terms of what kind of people they're looking for. And so
7 the department launches two recruitment trips a year
8 basically, one in the fall and one in the spring. The
9 logistics and the timing is very important because most
10 teachers have commitments in their own contracts and
11 their own states or they're finishing school. And so the
12 timing of those recruitment trips are logistically such
13 that we can catch them as we're coming around the back
14 end or the front end into the job situation.
15 Q. So is it effective, I mean because --
16 A. I actually don't think it's as effective as it
17 should be, could be. And one of the reasons is that when
18 the department goes out, it does its best to identify
19 where the hot fishing spots are, so to speak. And so the
20 capacity that's being built there now is -- and I brought
21 copies and I'll leave it with the committee, but it's a
22 recruitment and retention continuum. That is if the
23 State is going to have the capacity to recruit and
24 retain, it needs to grow its own. How does it do that?
25 It needs to go to the high schools. It needs to get kids
Page 164
1 interested early in education. We have a teacher cadet
2 program now in place, I say we, I'm not there anymore,
3 but the department has a teacher cadet program, getting
4 to kids early, talking about education as a career,
5 linking them up to community colleges, working with
6 community colleges with the right kind of curriculums so
7 that when they go to the University of Hawaii, all the
8 course work is in line and in place. Those are the kinds
9 of things that the recruiting and retention efforts
10 should be focused on. That takes time. Unfortunately,
11 we're not in a position right now to be able to see the
12 fruits of that, but clearly that's what the department
13 needs to go.
14 Q. Okay, thank you very much.
15 A. Sure.
16 REPRESENTATIVE ITO: Thank you, Madam
17 Chair.
18 CO-CHAIR SENATOR HANABUSA: Members,
19 just a housekeeping matter before we proceed. Miss
20 Brogan has been sitting here, and as you know, we also
21 have her noted for today. She has kindly agreed to
22 return Friday at one o'clock, and she will have -- we
23 will take her testimony at that time. So with that, we
24 will continue. Senator Matsuura.
25 SENATOR MATSUURA: Thank you, Madam
Page 165
1 Chair. Just a couple questions.
2 BY SENATOR MATSUURA:
3 Q. Does the Columbus group specialize in
4 recruiting special ed teachers?
5 A. No. Their niche is actually in the DD side,
6 the developmentally disabled, the special needs
7 recruitment of people who -- for example, psychologists,
8 mental health therapists, those that are associated --
9 their primary work has been in the ICF, intermediate care
10 facility DD area.
11 Q. On the medical, not on the special ed, special
12 education side?
13 A. Right. Their team consists of a
14 multi-disciplinary group of folks who range from doctors,
15 Ph.D. types. They do have somebody on their team in the
16 main office that is special ed.
17 Q. Do you know if the Columbus group is doing any
18 other business with it, searching for other states or
19 other municipalities for special ed teachers now or are
20 they doing --
21 A. I don't know.
22 Q. -- exclusive?
23 A. Yeah. I don't know.
24 Q. Because you mentioned that we're paying for
25 setting up the offices?
Page 166
1 A. Right.
2 Q. Sending out mass mailings to 125,000 teachers?
3 A. Right.
4 Q. Yet they're only referred, their contract only
5 allowed -- they're only expected to even just maybe ten
6 to 14 referrals a month.
7 A. Right. I'm not --
8 Q. So we're paying for 125,000 mailings but yet
9 we're only obligating them to a ten to twelve -- ten to
10 14 referrals a month?
11 A. Well, we --
12 Q. How do you know -- where's the accountability
13 that they're not using our money to further their
14 business as well as possibly subsidize other states?
15 A. We had asked them to be aggressive about
16 recruitment and, you know, they --
17 Q. But where's the accountability for the State of
18 Hawaii since we're paying for total -- the office spaces,
19 total recruitment, basically carte blanche everything,
20 including mass mailings for them because I take it their
21 mass mailing says please contact Columbus group, not
22 please contact State of Hawaii, correct?
23 A. Actually, they asked for permission, and I
24 think there's -- in the contract, they had X'd out one of
25 the special conditions because they wanted to be able --
Page 167
1 to be able to have the right to list the Department of
2 Education, State of Hawaii in their brochures, because
3 general conditions don't allow contractors to do that.
4 Q. You know, you also mentioned that there's, you
5 know, in addition to all the package, the 100,000, that
6 you also gave them the fringe benefits similar to what
7 the HSTA offers its current teachers. One of the
8 complaints I've been hearing from the current regular ed
9 special ed teachers is there's no accountability.
10 They're not DOE employees, they're Columbus employees. I
11 mean our current DOE special ed teachers are required to
12 be on call 24 hours a day. You know, most of them stay
13 up to two, three o'clock in the morning doings IEPs and
14 trying to do ISPED, yet the Columbus group teachers
15 aren't under that -- I mean they have all the fringes,
16 the pay, the higher pay, the higher package, all the
17 fringes in terms of vacation, but yet when it comes to
18 the bad stuff, I mean the responsibility stuff like what
19 our local teacher has, they are not obligated to that.
20 A. Okay. The Columbus teacher is supposed to have
21 the same -- they're supposed to mirror a regular ed
22 teacher. And I guess the way I want to respond to that
23 is if there's a particular complaint about a particular
24 teacher, then that needs to be brought to the attention
25 of the DOE. Because one of the responsibilities of the
Page 168
1 Hawaii office is to make sure that there is that
2 accountability that if a principal, for example, has an
3 issue with the Columbus teacher, that issue is resolved,
4 and so if there's some specific complaint about a
5 specific incidence, then that needs to be raised.
6 Q. But currently in your previous testimony, you
7 said that we're short 385 teachers, there's such a mad
8 rush to establish this contract, yet with the contract is
9 only allowed ten to 14 referrals a month. I think the
10 referrals means just they're sending over the person to
11 get interviewed, not guarantee hire, but if we are in
12 such a big rush, guaranteed we got to hire everybody that
13 they send just to meet the compliance.
14 A. The way that works is clearly you don't want to
15 have a situation where a school is forced to take
16 somebody.
17 Q. But in actuality, the way it is set up, we're
18 getting ten to twelve -- ten to 14 referrals a month,
19 we're 385 short, basically we're not in a position to
20 down -- I mean turn down anybody?
21 A. You're right. The demand exceeds the supply,
22 but I think if you need information, I understand and I
23 did read, Columbus did do a customer satisfaction survey,
24 and the principals, by and large, were very happy with
25 the quality of teachers that they were getting. They
Page 169
1 were satisfied with the qualifications that they were
2 coming with, so I think what you'll find is albeit it's a
3 very expensive contract, but we have teachers now,
4 qualified teachers in schools and the principals are
5 satisfied with what they're getting.
6 Q. Just one last final question. In the earlier
7 part of your testimony, you said that there was an error
8 made, that figure 85 percent was given but yet --
9 A. Right.
10 Q. The true was 67?
11 A. Right.
12 Q. What do you mean there was an error made in the
13 DOE?
14 A. It occurred before I arrived in the department,
15 so I'll reconstruct what I know. The department had been
16 reporting in its regular reports to the monitor, the
17 number of teachers effectively licensed and credentialed,
18 and that the number they were counting was 88 percent.
19 And so the monitor had fixed in his mind because the
20 department had been reporting that there were 88 percent
21 of our teachers were licensed and credentialed. Whether
22 by misunderstanding or oversight, I can't really say, but
23 what got counted was more than the licensing and
24 credentialed definition teachers that the monitor would
25 have accepted. And when -- and when the former personnel
Page 170
1 officer went back to verify and finally after two and a
2 half months did, the count in matching with definition
3 was 67 percent.
4 Q. So basically after that we were kind of dead in
5 the water?
6 A. Way out of compliance.
7 Q. Okay.
8 A. Or close to what would have been a benchmark
9 yes.
10 Q. Okay, thank you.
11 CO-CHAIR SENATOR HANABUSA:
12 Representative Kawakami followed by Senator Sakamoto.
13 REPRESENTATIVE KAWAKAMI: Thank you,
14 Chair Hanabusa.
15 BY REPRESENTATIVE KAWAKAMI:
16 Q. Hi.
17 A. Hi.
18 Q. I wanted to follow up on the part of the
19 contract where Columbus hired supervisors to come out to
20 the State to help.
21 A. Right.
22 Q. Now, that was in the initial contract, am I
23 correct?
24 A. Right. Right.
25 Q. Okay. There were two that serviced?
Page 171
1 A. There are two that I remember. I think the
2 office got expanded. I think there's a clerk and there
3 maybe a counselor, but the two that I remember, one is
4 Diane Sedoriak and the other is Virginia Clements.
5 Q. Okay. Now, these people came back and forth
6 intermittently. Did the contract say they come for a
7 certain period of time and then they return and then they
8 come back and check people or they just check them at the
9 beginning?
10 A. No. They are permanently living here.
11 Q. Permanently?
12 A. Yes, they have relocated. They do -- they do
13 go to the mainland, I know, for either personal time or
14 business meetings related with -- related to Columbus,
15 but I don't know the duration of that. But they are
16 permanently here.
17 Q. Okay. Now, the department is paying for them,
18 aren't they?
19 A. Yes.
20 Q. Okay. What is the -- what was that sum or
21 amount in the contract?
22 A. It's part of the management costs, so the
23 salary is negotiated between Columbus and the office.
24 Q. So you wouldn't know?
25 A. We could ask them, but I wouldn't know, right.
Page 172
1 Q. Okay. So -- and it included airfare?
2 A. Yes.
3 Q. Housing?
4 A. Yes.
5 Q. And car?
6 A. I don't -- no. Car is not something that --
7 Q. I see. Transportation here, etc. Okay. When
8 the contract was initiated, were there safeguards and
9 stipulations for these teachers who leave the system,
10 were there any? I'm not sure, but I heard there were
11 some, a few.
12 A. Yes.
13 Q. That returned?
14 A. There were a few that actually leave -- left.
15 And my recollection is that the reasons were personal,
16 family or medical. But by and large, the company has
17 been very successful in keeping those teachers here in
18 Hawaii.
19 Q. So were there any -- I mean did they still get
20 paid, did they have to forfeit something or were they off
21 scott free?
22 A. I think we would have to ask Columbus about the
23 contract provision that they have individually with each
24 teacher.
25 Q. So you weren't privy to that?
Page 173
1 A. We were not privy to that, no.
2 Q. Why not?
3 A. Part of the business arrangement is that
4 Columbus would be able to negotiate with each teacher
5 what it was that teacher believed he or she needed to
6 actually make a decision to relocate to Hawaii.
7 Q. Now, the last question I have has to do with
8 knowing that this contract was going to be such a large
9 sum, and you know teachers -- there was going to be
10 morale problems and all of these kinds of things would
11 enter the picture, you still went ahead and did it, okay,
12 and you're satisfied that the number of teachers we got
13 here is going to meet this percentage? It's way off.
14 A. At the time of the contract, you're right, we
15 were chasing 383 special ed teachers, just having come
16 fresh off a contempt citation by the Federal Court, new
17 benchmarks, requiring us to recruit or recruit with the
18 mainland recruitment firm. We recruited, we did the best
19 we could in terms of making sure that what we contracted
20 with was going to be able to do the job, and quite
21 frankly, hoping that our own State department would be
22 able to beef up its own efforts in fall and spring
23 recruitment.
24 Q. Okay. My last question, very last question,
25 did you check with UH also and try to work with them?
Page 174
1 A. UH --
2 Q. Prior to this contract?
3 A. UH is part of an ongoing collaboration with the
4 Department of Education, as is other institutes of higher
5 education, Chaminade, BYU. There are other higher
6 institutions that the department collaborates with, but
7 the UH has not been able to turn out the number of
8 teachers needed. There's just too many leaving the
9 system, it's hard to keep up, and so that's why the
10 department has to really restrategize, as I discussed
11 earlier, about how it's going to grow its own. It's not
12 just at the university level. It's really at high school
13 level.
14 Q. So HPU and all of those others were not looked
15 at or asked or offered?
16 A. Well, here's the interesting thing, and I'm
17 really glad you brought that up because one of the things
18 we looked at is how could we get our local companies to
19 churn out the teachers that we need, and you know, they
20 charge an X amount of dollars for tuition and it's
21 actually pretty rather expensive, but you know, there's
22 the benefits of being able to graduate rather quickly,
23 curriculum, etc. We thought maybe one way of doing it
24 was to subsidize kids who might want to go into the
25 teaching profession but would choose rather to go to an
Page 175
1 IHE, that if we could somehow get a subsidy in for those
2 kids with a commitment to work for the DOE after they're
3 done, then that would be a good thing. My understanding
4 though is that we asked the AG for an opinion on this
5 because it's State money, and what we found out from the
6 AG was that there's a constitutional issue related to the
7 use of public funds for private institution. And so
8 unless that changes, it would be difficult for us to go
9 that route, but you're right, we see it as a potential
10 gold mine, we just can't get to it.
11 Q. Right. Okay, we'll kind of look into that.
12 A. Yeah.
13 Q. Thank you very much.
14 A. That would be great. That would be great.
15 Q. Thank you.
16 REPRESENTATIVE KAWAKAMI: Thank you,
17 Chair Hanabusa.
18 CO-CHAIR SENATOR HANABUSA: Thank you,
19 Representative Kawakami. Senator Sakamoto followed by
20 Representative Marumoto.
21 SENATOR SAKAMOTO: Thank you, Chair.
22 BY SENATOR SAKAMOTO:
23 Q. Earlier when Mr. Kawashima was asking you about
24 the $100,000, and I believe you gave the example of if it
25 costs 80,000, then Columbus would keep the difference,
Page 176
1 and then I heard you mention that if it was over 100,000,
2 Columbus would then be --
3 A. They would eat it.
4 Q. Eat that. When would that case come up, the
5 over $100,000 case?
6 A. It actually would depend on the teacher's
7 circumstances. There may be -- there may be a teacher,
8 and I'll just give a scenario, that says -- and maybe
9 this person may have right qualifications, passed
10 background check, desirable, but the teacher may say I
11 can't come because I need to pay off my school loan and
12 it's this amount of money. There could be conceivably
13 circumstances where it's over 100K, but that's between
14 Columbus and the teacher.
15 Q. What would entice Columbus to go there?
16 A. You're right. You're right. There is really
17 no incentive for them to do that except an obligation.
18 Q. The ten to 14 per month, is that a contractual
19 item or just their estimate of how many potential people
20 they could have?
21 A. No. How that came about was we knew we wanted
22 to target X amount of teachers, so in the second
23 amendment was 138 special ed teachers.
24 Q. And if they didn't --
25 A. In total.
Page 177
1 Q. If they didn't meet -- was there any numerical
2 number -- I guess in the sense of if you have to get ten
3 a month and you get eight at $100,000 --
4 A. Oh, right. Right.
5 Q. -- then you're obligated to get two more no
6 matter what it costs. I could see --
7 A. Right.
8 Q. -- that, but was there any provision like that?
9 A. No, but what we -- in our conversations or
10 discussions with the company, what we said was we'll be
11 monitoring your ability to do this. And if at any time
12 we think you're not doing what we need to have happen we
13 will exercise our termination rights. Can I add to that?
14 Q. Yeah.
15 A. After that contract was let, I asked the
16 staffer to also research other companies because clearly
17 we wanted to have our options open, and she did, and she --
18 she talked to actually four or five companies, and what
19 popped out was the primary reason for the companies
20 didn't want to do business was because they search for
21 private teachers, they don't want to be held, I guess, or
22 they find it difficult to recruit for public school
23 system. The other company, which is something the
24 department ultimately contracted for later in May for
25 Molokai was a company called Education Placement
Page 178
1 Services. That company charged a referral fee. There
2 were many things that were left to the department to do,
3 pay for, the interview, etc., etc., etc. But what we
4 thought was that might be an opportunity then to see
5 whether or not the department could build the capacity
6 and then if we had to recruit with a company like that.
7 Q. Okay.
8 A. But we -- yeah.
9 Q. Once the 100,000 in round numbers was
10 determined with Columbus, were our recruiters energized
11 to say you too may offer up to $100,000?
12 A. No. They weren't. And you know, they would
13 come back, and this is even prior to Columbus, a little
14 demoralized because they would go to these job fairs in
15 other states to find other states offering large
16 incentives, and they felt that if they had incentives to
17 take with them that they might have a better chance, and
18 so with the development of these new incentives for our
19 own teachers, we think that we were able to arm them at
20 least with some sufficient incentives of our own to take
21 across. But again, you know, the competition is
22 extremely fierce state by state, and some states are just
23 more successful.
24 Q. Even now our recruiters aren't allowed to offer
25 more?
Page 179
1 A. No. We're constrained by budget.
2 Q. I'm just curious. It's the same pot that the
3 100,000 that a Columbus recruiter can get but we're not
4 allowing our recruiters to offer?
5 A. Yeah. We try to -- we try to be sensitive
6 about the money value of all of this and we think at the
7 time and that's -- I think I mentioned to Representative
8 Ito to take a look at the FRP, but there's a laundry list
9 of incentives that not only are being offered to teachers
10 here for retention purposes, but also hopefully
11 recruitment purposes as well.
12 Q. Okay, last question.
13 A. But it's not $100,000.
14 Q. I'm glad to hear, you know, at least you're
15 mentioning consideration for the cost. Ultimately who's
16 responsible for the cost of recruiting, whether it's
17 Columbus or by our own recruiters?
18 A. I'm sorry, I'm trying to understand the --
19 Q. Well, I guess my first question -- the earlier
20 question was about why our recruiters weren't energized
21 to say you can offer up to 100 or 98 or 96 or 94 or 92 or
22 some number?
23 A. Okay, I see what you're saying.
24 Q. And you're saying it's related to watching the
25 costs.
Page 180
1 A. Right. Okay, I'm sorry.
2 Q. I'm asking who's responsible for the costs?
3 A. I'm sorry, maybe I can be more clear about
4 that. The department has an existing budget for
5 recruitment. It is not a large budget. And primarily it
6 funds the two job fairs per year. What supplemented that
7 this year was the additional incentives that we worked
8 out vis-a-vis the court order to identify incentives for
9 existing teachers, so actually it's the same Department
10 of Education budget, but the recruitment budget within
11 the personnel office is something that's just been -- has
12 been there all this time.
13 Q. But it's separate, I guess money spent with
14 Columbus, money spent with our recruiting, I guess my
15 question was so you're not responsible for the Columbus
16 money, but you're responsible at that time, responsible
17 to in house recruiting or you were responsible for the
18 cost of both or neither?
19 A. No, personnel fell under my area of
20 administration.
21 Q. In house?
22 A. Yes. In house.
23 Q. So you're responsible for in house?
24 A. Yes. Yes.
25 Q. Who was responsible for the Columbus house?
Page 181
1 A. Columbus, because it was recruitment and
2 retention, which fell under personnel, fell under my
3 house as well.
4 Q. Thank you.
5 SENATOR SAKAMOTO: Thank you, Chair.
6 CO-CHAIR SENATOR HANABUSA: Thank you.
7 Representative Marumoto followed by Co-Chair Saiki.
8 REPRESENTATIVE MARUMOTO: Thank you.
9 BY REPRESENTATIVE MARUMOTO:
10 Q. Miss Yoshioka, I'm a little astounded with a
11 contract that I think a first draft was over 120 million
12 dollars, was signed at 100 million dollars. Did anybody
13 say I wonder whether the State could afford this?
14 A. It was an astounding amount for us, too. And I
15 think the only response I can make to that is that we
16 were just truly focused on getting -- meeting the
17 benchmark, not being held in contempt and being subject
18 to other fines and penalties by the Federal Court.
19 Q. Sounds like you're panicked but --
20 A. Yeah.
21 Q. -- it seems very excessive.
22 A. Yeah. There's no doubt that for any of us this
23 was a very expensive venture. We were just under a lot
24 of pressure to meet the crunch deadline.
25 Q. Yeah, you've said that. If each teacher, let's
Page 182
1 say you were -- you're out to recruit 375 teachers, is
2 that correct?
3 A. The initial contract was for 383.
4 Q. 83? That would account for 38 million dollars?
5 Is my math correct?
6 A. 38 million is --
7 Q. If each teacher costs $100,000, if they
8 expended $100,000 on each teacher?
9 A. Right.
10 Q. That would leave another 62 million dollars or
11 so. How was that budgeted, the rest of the money, for
12 how many mainland offices, how many staff?
13 A. Okay. The budget that was prepared, we
14 indicated to Columbus, at least in the initial draft,
15 that we needed 383 teachers, and that we had discussions
16 with them about what would be feasible in terms of what
17 they thought they could actually deliver in the way of
18 real live teachers teaching and what month, how many
19 months would it take. That discussion then led to a
20 schedule which resulted in the ten to 14 per month that
21 both the department and the company in talking to them
22 felt that we probably -- it was reasonable to bring those
23 on in that -- in that time frame. The budget then was
24 derived because obviously if you don't bring on teachers
25 all at once you have a staggered hire situation. And so
Page 183
1 the salaries were staggered based upon when we thought --
2 Q. I'm not talking about the salaries, the money
3 other than the salaries, other than the $100,000. You
4 know, you're also paying for so many mainland offices,
5 you said?
6 A. One Hawaii office.
7 Q. And --
8 A. And the other money was for recruitment staff
9 on the mainland.
10 Q. And how many?
11 A. I don't know how many Columbus ultimately
12 hired.
13 Q. You don't know?
14 A. No.
15 Q. How much was budgeted for money, for travel,
16 for instance?
17 A. Oh, we have that information, it's in the
18 contract. What Columbus did was identify what efforts
19 they thought they would need to gather the recruitment
20 efforts, and they didn't tell us we're going to hire six
21 people on the mainland. Is that what you're asking?
22 Q. I'm just asking for some broad accounting for
23 the 60 million dollars that was not set aside to spend
24 for the teachers.
25 A. It's -- yeah, it's in the --
Page 184
1 Q. 60 million dollars.
2 A. Yes. It's -- the budget that was presented
3 laid out four tracks. The first track identified
4 recruitment, the management costs. The second track was
5 for the support staff here in Hawaii.
6 Q. Which is how much? Just ball park.
7 A. The initial contract?
8 Q. Well, just ball park. Yes. I mean how do you
9 account for 60 million dollars in, you know, broad, the
10 three largest categories?
11 A. Okay. And this was the first contract, not
12 amended, right? There is an Exhibit B, compensation and
13 payment schedule. Actually what you want to do is go to
14 table seven, there's a table seven in the contract that
15 lays out by category how much money is required. I think
16 that's what you're asking. Track one, management
17 services, year one, 1.1 million, recruitment travel 2.6
18 million, track two, retention and staff support, staff
19 support services 1.2, retention support and travel
20 284,000, salaries --
21 Q. At that rate it's going to add up to 60 million
22 pretty slowly. My time is up, but perhaps you could
23 provide us with that information if we have it -- if we
24 don't have it already. I have other questions and it
25 would be basically, you know, how much was eventually
Page 185
1 appropriated by the legislature for this contract, how
2 much was actually used and then how much was then lapsed?
3 A. Okay.
4 Q. And perhaps somebody else could ask the
5 question later on. Thank you.
6 A. Yeah. I'm sure the Department of Education
7 would be happy to give that to you.
8 Q. Thank you very much.
9 CO-CHAIR SENATOR HANABUSA: Thank you,
10 Representative Marumoto. Co-Chair Saiki.
11 CO-CHAIR REPRESENTATIVE SAIKI: Thank
12 you.
13 BY CO-CHAIR REPRESENTATIVE SAIKI:
14 Q. Miss Yoshioka, when you negotiated the
15 contract, there's a shortage of 383 teachers. And then
16 the contract was negotiated down to 138, so what was the --
17 what happened to the 245 teachers --
18 A. The 245 --
19 Q. -- that were left out of the contract?
20 A. -- teachers were actually Oahu based. What we
21 did was we focused the 138 on the outer islands with
22 particular emphasis on the hard to recruit areas of
23 Molokai, Lanai, Ka'u and Kohala.
24 Q. But who recruited the 245 on Oahu?
25 A. The State. That was the State's attempt to do
Page 186
1 that.
2 Q. Has the State done that?
3 A. You know, I think that's a question for the
4 department. I'm not there so I can't give you up to date
5 information about that.
6 Q. How was it negotiated that -- I mean what was
7 the process in negotiating the distinction between the
8 hard to fill positions versus the Oahu positions? How
9 did that come about?
10 A. Oh, sure. What I did was I initiated an
11 accounting process inside the department, and I can
12 actually leave a sample of the report for you, but we can
13 now identify for you school by school number of licensed,
14 credentialed, other categories that I spoke about in each
15 of the schools so that we know by school, by area where
16 we are with respect to the benchmark. Kohala, Ka'u,
17 Lanai and Molokai were identified specifically in the
18 Federal Court stipulation as hard to recruit.
19 Q. My question is why did the department decide to
20 reduce the number from 383 to 138?
21 A. The 383 was statewide. When we looked at the --
22 and we didn't have a better number at the time. I need
23 to -- that may make it more clear. We did not know how
24 many teachers when we negotiated the contract with
25 Columbus were actually associated with outer islands,
Page 187
1 Ka'u, Kohala, Lanai and Molokai. When we finished the
2 report in late September, early October, we were able to
3 identify which ones were specific to those areas, and
4 that's why we amended it.
5 Q. But why did the department do that? Why did
6 the department amend it to 138?
7 A. When we discussed with the AG the way the
8 stipulation was written, there was some, I guess
9 confusion at least on our part as to whether or not it
10 meant statewide or whether or not it meant the hard to
11 recruit outer island positions. And in that discussion
12 with the AG and not having been armed with the
13 information, the Attorney General advised us that in
14 fact, we could lean towards the outer island hard to
15 recruit areas, and so that's what we did.
16 Q. Was that number reduced after the teacher's
17 union objected to the original contract to the original
18 terms?
19 A. No, no.
20 Q. It wasn't done?
21 A. I don't know about the timing, but it wasn't
22 the reason for it.
23 Q. Was it part of the reason?
24 A. No.
25 Q. Was it a consideration?
Page 188
1 A. Clearly. I mean HST is a partner of the
2 Department of Education and so the teachers -- it was a
3 consideration in terms of being able to work or having
4 teachers being able to effectively work, but we also
5 clearly in discussion with the AG's office wanted to make
6 sure that we were still in compliance, and so that's why
7 the discussion about, you know, how many do we really
8 need to do this with.
9 Q. Did the HST stop its -- cease its objections
10 after this contract number was reduced down to 183?
11 A. I think they've always were concerned about it
12 and I think from a union perspective, yeah, whenever you
13 bring in nonunion folks it's a problem.
14 Q. Well, but did HSTA stop objecting after the
15 amount was reduced to 183?
16 A. I don't remember actively hearing them, okay,
17 it's okay now, I don't think that was ever -- was never
18 there.
19 Q. Do you know whether or not the 245 Oahu based
20 teachers, the 245 were offered special types of
21 inducements or incentives through the department?
22 A. Yes. They were. And I think that's where that
23 FRP, the FRP document will be useful to you because it
24 lays out all of the incentives offered to existing
25 teachers, and I'm sure that the department can share with
Page 189
1 you how much of that was offered and how much was
2 expended, etc.
3 Q. Well, were those incentives limited to the 245
4 or were those 245 prioritized?
5 A. All special ed teachers were offered
6 incentives, as I recall.
7 Q. So --
8 A. I'm sorry. I may need to clarify that. Some
9 of the incentives were based upon hard to recruit areas
10 as well, so not all SPED teachers, for example, if there
11 was incentive specifically for Molokai, no other teacher
12 would get the Molokai incentive except the Molokai
13 teacher.
14 Q. Is it fair to say that the 245 Oahu based
15 teachers were afforded incentives for the most part or
16 given first consideration?
17 A. Yeah. That's my recollection, but I think the
18 FRP document and the department's accounting of that will
19 help you with that answer. I don't feel comfortable
20 saying or giving a definitive answer.
21 Q. Okay. Thank you.
22 CO-CHAIR SENATOR HANABUSA: Thank you.
23 I'm checking if we have had any of our missing people
24 return.
25 BY CO-CHAIR SENATOR HANABUSA:
Page 190
1 Q. Miss Yoshioka, were you here when the chair and
2 the former chair of the Department of Education -- I mean
3 the Board of Education was testifying?
4 A. No, I wasn't.
5 Q. Let me ask you something and clarify your
6 testimony. You said that you knew in September or
7 October of 2000, and the contract with Columbus group was
8 entered into around September 1, 2000, so somewhere
9 around there, you knew that the number would reduce in
10 terms of number of teachers to be recruited from 380 to
11 138, is that correct?
12 A. Right.
13 Q. So I assume that from that point in time to
14 sometime in December or January where the actual
15 supplemental contract was executed, that you were
16 negotiating over the reduction with Columbus group?
17 A. If I remember correctly, the amendment to the
18 Columbus contract was around the end of October, mid to
19 end of October. I think that's what I have in my mind
20 anyway. And so the notification to them would have
21 occurred sometime before that.
22 Q. I'll represent to you that the document that's
23 been provided to us is dated January 28, 2001 with the
24 signatures from Columbus group being December 22, 2000,
25 and Dr. LeMahieu signing on January 28, '01. That's why
Page 191
1 I wanted to clarify the time frame with you.
2 A. Oh, okay. You know, Co-Chair, I could be
3 mistaken. That was my recollection, but if your document
4 is accurate then that's what --
5 Q. But it's also your recollection that in around
6 September, October you knew that there would be this
7 reduction?
8 A. Towards the end of -- yeah, September, that's
9 correct. Because we had just developed accurate
10 reporting about where our licensed credentialed and other
11 teachers were.
12 Q. Okay, and it was also your understanding at
13 that time that you only really needed to address those on
14 the neighbor islands?
15 A. Yes.
16 Q. Now, one of the comments made by the Board of
17 Education chairs, I'm not -- I think it was Mr. Watanabe,
18 and I'll make this representation to you, is that they
19 never knew that the Columbus group contract was actually
20 reduced and in fact when they came to testify before us,
21 they kept using the hundred million dollar figure for --
22 really it's a little less when you look at it than three
23 years, but they kept using that figure, and when we told
24 them that it really was reduced to about 40 million
25 dollars for the same time frame, they were honestly
Page 192
1 surprised. Now, can you tell me what kind of
2 communication was there between the department as far as
3 you know and the board so that when they come before us
4 and they ask for money, they're not talking about the 60
5 million dollar deficit there?
6 A. Yeah. I think, at least from my perspective,
7 the department tried to keep the board informed.
8 Clearly, most of the communication came between the
9 superintendent and the board. There are subcommittee
10 meetings that are held but -- and in fact, I do remember
11 the board being briefed by the department on Felix. So I
12 know that there was communication and I know that the
13 department made efforts to keep them informed. I don't
14 know why they might not have known about the reduction in
15 Columbus.
16 Q. Well, let me ask you something that you would
17 know about. Did you at any time after September or
18 October appear before the board or its subcommittee and
19 tell them that the Columbus contract is no longer 120 or
20 100 million, it is really a 40 million dollar contract?
21 A. No. No. There was never -- never came up in
22 subcommittee, the appropriate communication channel was
23 through the superintendent's office. No.
24 Q. Do you know if the superintendent ever told the
25 board, if you have any knowledge?
Page 193
1 A. I don't know that.
2 Q. That's fine. The other comment you made that's
3 also very interesting is you said that you believed that
4 Columbus has delivered the 138 teachers as required in
5 the supplemental agreement?
6 A. Right.
7 Q. Can you tell me the basis for that statement?
8 A. Yeah. There was -- I had -- I keep in touch
9 with some folks on occasion and there was an opportunity
10 in discussing well, how's it going with the department,
11 and I remember being concerned because when I left the
12 department they hadn't reached the 138, and from this
13 person I heard that she thought it in fact had, so --
14 Q. Let me run these figures down so that at least
15 I know that your frame of reference is the same as ours.
16 The original contract would have required by March 31 of
17 2001, 200 teachers. That's the original, the 120 or 100
18 million dollar contract.
19 A. Okay.
20 Q. Then the supplemental agreement would have
21 required 50 teachers by March 31, 2001. Does that sound
22 correct to you?
23 A. If you're reading off the schedule, I'm sure
24 that's correct. Right.
25 Q. Well, we received testimony from an Ed Koyama.
Page 194
1 You know Mr. Koyama?
2 A. He's the departmental auditor, right.
3 Q. He said as of March 31, 2001 there were only 23
4 teachers.
5 A. Okay. I think the difference in the two
6 numbers is the contract was based on a referral schedule
7 as opposed to actual teachers. So I think that's the
8 difference.
9 Q. So by his numbers, there are only 23 that were
10 actually -- are you saying that there are only 23 that
11 were actually in the State of Hawaii whereas there were
12 actually 50 that were referred here?
13 A. If the 50 that you're getting the number from
14 is off a schedule, then that was what -- in the contract,
15 then that was what our expectation was in terms of number
16 of referrals, right.
17 Q. So I guess my question is your expectation was
18 actually 200 in the first contract, it went down to 50
19 and in actuality we got to 23?
20 A. Actual live bodies, right.
21 Q. So do you have any different knowledge than
22 that that as of March 31 there were in fact more than 23
23 bodies?
24 A. No. I don't.
25 Q. And the reason I was asking that is because by
Page 195
1 August we would have had to have live bodies, if my math
2 serves me, another 115 people between March 31 and August
3 31?
4 A. Yeah. Before I left, we -- the department
5 launched a massive job fair on Maui. The teachers
6 strike, I think, had occurred in March, if I remember
7 correctly, March or April.
8 Q. April?
9 A. April. And so operations were difficult at
10 best to conduct the recruitment efforts because
11 principals were necessarily busy with strike operations,
12 and so the department conducted a mass interview in Maui.
13 I believe there were 100 some odd, and I think the
14 department can confirm that number, of teachers that came
15 with the participation of a number of principals to come
16 and interview these applicants and I think that's where
17 the push came.
18 Q. Miss Yoshioka, I understand, and I think we're
19 mixing apples and oranges. We're talking about the
20 Columbus group?
21 A. Right.
22 Q. What they were supposed to deliver?
23 A. Right.
24 Q. So are you saying this recruitment in the State
25 of Hawaii is by the Columbus group as well so we're
Page 196
1 having our teachers recruited in the State of Hawaii and
2 giving the Columbus group profits?
3 A. Oh, no, no. Oh, no, no, no, no. We conducted
4 a job fair in Hawaii for Columbus. In other words, we
5 had a massive effort because the strike had slowed down
6 operations, we decided that perhaps what we ought to do
7 is have one job fair, and we decided on Maui because it
8 was central where the job applicants from Columbus would
9 come to Hawaii, we would coordinate with principals, to
10 have the principals come and interview them all at the
11 same time, make use of efficiency that way in terms of
12 time, and I think what I'm saying is I think that was the
13 push then that got us over that, the low hump of number,
14 if you will.
15 Q. Okay. Who paid for the job fair?
16 A. You know, I don't recall how that was worked
17 out. I think it was a combination of efforts.
18 Q. Thank you. My time is up, but members, because
19 Miss Brogan has kindly agreed to reappear on Friday, we
20 still have some additional time, so if we have any follow
21 up questions, beginning with Mr. Kawashima.
22 SPECIAL COUNSEL KAWASHIMA: Thank you,
23 Chair Hanabusa. I do have some questions.
24 BY SPECIAL COUNSEL KAWASHIMA:
25 Q. You testified earlier that there were actually
Page 197
1 negotiations between yourself and Mr. Ronder, I believe,
2 that resulted ultimately in the contract that was signed.
3 A. Right.
4 Q. Now, usually in these negotiations one side
5 starts at this level high and other starts low and you
6 come to an agreement in between, right? Now, using this
7 agreement as the in between, where then was Columbus on
8 the high side, what more did they want that we did not
9 give them?
10 A. You know, I don't recall. I'm sorry. I'm just
11 trying to remember what --
12 Q. But there can't be much, right, because we paid
13 for everything.
14 A. Right. They came in, their proposal was --
15 their proposal was pretty much in the same form as you
16 see now. We questioned their proposal in terms of -- and
17 really the emphasis was why this approach, why wouldn't
18 this be successful, what is it that -- what is the
19 process by which you will be able to recruit the number
20 of teachers we need, so there wasn't a lot of jockeying
21 of numbers. That's my recollection.
22 Q. From our side where did we start then and move
23 up to?
24 A. No. We essentially took their proposal because
25 that was what --
Page 198
1 Q. All right.
2 A. -- we had asked them to do.
3 Q. All right. I think essentially that's what
4 you're saying, is they made a proposal, we essentially
5 accepted it, in fact, we went one further and allowed
6 them to strike this, this standard section of the State
7 contract that doesn't allow contractors with the State to
8 use the fact that they have that contract in their hands
9 and they wanted to strike that and we agreed to strike
10 that?
11 A. But the reason for that was so that they could
12 refer to the State of Hawaii in their ads. The way that
13 provision reads is that they're precluded from doing
14 that. And that didn't make sense. We wanted to make
15 sure that if they were going to advertise in any shape or
16 form, whether it be a brochure or anything else, that
17 they mention the State of Hawaii.
18 Q. Well, don't you understand this contract -- I
19 mean I should say this provision to prevent them from
20 other -- also other solicitations with other states or
21 other possible potential clients that they can't use the
22 fact that they had the State of Hawaii as a client as an
23 advertising feature?
24 A. The way --
25 Q. Did you not understand it that way?
Page 199
1 A. No, the way I read the condition is that the
2 contractor cannot refer to the State of Hawaii. That's
3 how I read it. If we were to leave it in there, they
4 would not be able to advertise with our name on that
5 advertisement if this were left in. That's how I read
6 it.
7 Q. Is that how you read it?
8 A. Uh huh.
9 Q. Is that how the Attorney General's office
10 interpreted it for you?
11 A. They did not interpret it. I mean we didn't
12 ask them to interpret it for us.
13 Q. Am I to understand that all the legal decisions
14 that were made on this contract were made by you?
15 A. We incorporated all the general conditions
16 approved by the Attorney General so that it would have in
17 fact and in form all the conditions that are in normal
18 State contracts.
19 Q. And you -- you testified that you had read at
20 least a couple of drafts by Miss Shikata?
21 A. Right.
22 Q. And that she was in agreement with what you
23 were doing?
24 A. Yeah. And again, I think what I said was, and
25 to be fair, is that when the drafts were run by the
Page 200
1 Attorney General's office it was on the Felix side of
2 their operations, meaning the emphasis at looking at the
3 contract, it was really to make sure they understood
4 where we were with compliance through the benchmark.
5 Q. I understand. But you also wanted them to look
6 at it from a legal contractual standpoint, didn't you?
7 Or did you tell them not to look at it?
8 A. Well, no, no, I didn't tell them not to look at
9 it. I think there was an assumption that they would do
10 that.
11 Q. That's what I'm asking you, is that Miss
12 Shikata apparently approved this contract legally,
13 apparently? Or not?
14 A. Well, she reviewed it.
15 Q. Well, ma'am, let me ask you this. Do you feel
16 confident if we were to ask Miss Shikata, give her a copy
17 of this contract and say if you had reviewed this would
18 you have approved it as to form, that she would say yes?
19 A. I would feel comfortable with that.
20 Q. All right. And you're basing that upon what?
21 A. My discussion with her about the contract,
22 where we were.
23 Q. Okay. So you feel confident that you told her
24 all the important provisions of this contract and she
25 approved every one of them and the reason, the only
Page 201
1 reason you didn't have her sign it was because of time
2 constraints, is that a fair statement?
3 A. That's essentially it.
4 Q. All right. And then in your mind how long was
5 it going to take for you to get her to sign this, in your
6 mind?
7 A. I'm sorry?
8 Q. In your mind how long was it going to take for
9 you to get her to sign this agreement?
10 A. You know, as I said before, I remember being
11 really up against the wall in terms of getting this thing
12 executed.
13 Q. I understand. I understand.
14 A. I remember it going down to the last minute.
15 Q. So how long in your mind was it going to take
16 for you to get her to sign this agreement such that --
17 A. Probably --
18 Q. -- you felt that you could not do that?
19 A. Oh, realistically probably a couple of days. I
20 mean I could have walked it over there, I could have said
21 please look at this now, please sign it.
22 Q. But you chose not to?
23 A. I chose not to and I do recall it was a time
24 issue.
25 Q. Now, these employees, am I to understand that
Page 202
1 the State had -- State of Hawaii had no basis to -- I
2 should say had no right to review these employees or to
3 pass on these employees before they were hired by
4 Columbus?
5 A. No, that's not true.
6 Q. All right. So what rights did you have to pass
7 on these employees?
8 A. Columbus did the initial screening, Columbus
9 did the background check, Columbus did the credential
10 review. They would give us the names of these folks, we
11 would then set up the interview process or connect that
12 with the principals. It was up to the principals as to
13 whether or not they wanted any of the particular
14 applicants. The contract says that we have sole right to
15 decide who goes where, basically.
16 Q. So then the principals would agree whether or
17 not they would be hired then?
18 A. I'm sorry, the principals --
19 Q. The principals would agree whether or not this --
20 A. Right.
21 Q. -- specific employee would be hired or not?
22 A. Right.
23 Q. Were there situations where the principals
24 rejected potential employees?
25 A. I think there were a couple where they didn't
Page 203
1 think that the person would be a good fit. But what --
2 what was scheduled was a number of interviews with a
3 number of schools on the same island, so that principals --
4 there was more than one school.
5 Q. Were there any situations where Columbus
6 presented a potential employee, they're interviewed in
7 however many fashion, how many times that they were
8 interviewed and ultimately still not hired?
9 A. I think there were, but I think that's
10 information best gotten from the department.
11 Q. Probably very few?
12 A. Yeah.
13 Q. You probably wouldn't be able to venture a
14 guess as to how many, would you?
15 A. No. And I wouldn't feel comfortable doing that
16 but I know the department could.
17 Q. Do the employees now, once they came to Hawaii,
18 would they be bound by a contract to be here six months,
19 a year, 18 months, two years, whatever it might be?
20 A. My understanding was that they were bound by a
21 three year contract.
22 Q. All right. So that if they broke that
23 contract, the State would have rights against them?
24 A. That was not part of the contract, I think I
25 indicated that earlier. That was something that was not
Page 204
1 in the contract.
2 Q. So then you had no rights then, I guess, if
3 they broke that contract?
4 A. That's right.
5 Q. So it really wasn't a condition of the
6 contract?
7 A. That's right.
8 Q. It was a moral thing, it looks like, two years?
9 A. A moral thing? I'm sorry.
10 Q. In other words, there's no legal effect to if
11 they broke the contract?
12 A. Right.
13 Q. I see. Now, how about once the person was in a
14 school, for example, did the school personnel have the
15 ability to fire that person, if there was good cause,
16 assuming there was good cause?
17 A. If the principal was not satisfied with that
18 particular teacher, then the principal would have
19 recourse to work out whatever problems there might be.
20 It might be -- it might be something that might have a
21 remedy. We also had the latitude in moving that teacher
22 to a different school, that was always an option. But
23 clearly, the Hawaii office tried to work with the
24 principal if there were any issues.
25 Q. If that person just didn't work out, the person
Page 205
1 would get fired?
2 A. Yes. If in fact the person did not work out,
3 yes.
4 Q. And that did happen in fact?
5 A. No, not to my recollection, that that happened.
6 Q. If it did happen, according to the contract as
7 I briefly reviewed it, Columbus, not the State of Hawaii,
8 had the right to negotiate with that person for some type
9 of payment under their contract and whatever was
10 negotiated the State would have to pay, is that your
11 understanding?
12 A. I'm sorry, where are you referring to in the
13 contract?
14 Q. I'm looking at a provision, number -- on page
15 nine, absent complete agreement, I'm paraphrasing, the
16 agency procurement officer, that's the State, shall pay
17 the contractor, that's Columbus, the following amounts
18 provided payments agreed to under subparagraph 14D2,
19 which is not relevant, shall not duplicate payments, but
20 what it talks about is they say that unless there's
21 complete agreement under some other provision, the State
22 shall pay the contractor, anything the contractor pays
23 for goods and services, in other words, to the employee,
24 and then costs incurred in preparing to perform and
25 performing the terminated portion of the performance,
Page 206
1 plus a fair and reasonable profit on the performance. C,
2 costs of settling and paying claims arising out of the
3 termination of subcontracts, that's with the employees,
4 or orders subsequent to that paragraph. In other words,
5 all reasonable settlement costs with these teachers.
6 MR. NAKAMURA: Excuse me.
7 Q. Would be paid by the State, although negotiated
8 by Columbus?
9 MR. NAKAMURA: Excuse me,
10 Mr. Kawashima, she can't find the paragraph that you're
11 referring to in the contract.
12 Q. Way in the back of the conditions.
13 A. Oh, conditions.
14 Q. I'm looking at page 46, the facsimile page
15 number on the top. Are you at the page, Mr. Nakamura?
16 No. On the top, page 46, top right hand corner?
17 MR. NAKAMURA: Which paragraph, I'm
18 sorry, you're referring to?
19 Q. Three, paragraph three?
20 A. This is the general condition.
21 Q. Part of the general conditions?
22 A. State's general conditions?
23 Q. Yes. Why I'm paraphrasing is that it looks
24 like the State -- if there is a problem with the teacher
25 and the teacher is terminated or terminates themselves,
Page 207
1 any costs settling those claims that arise therefrom
2 would be negotiated by Columbus but paid for by the
3 State. Does that sound right to you? You know what,
4 Ms. Yoshioka, in fairness to you, I think the chairs are
5 going to take a break now, perhaps during the break you
6 can look at it.
7 A. Sure.
8 Q. Refer to Mr. Nakamura if you wish.
9 CO-CHAIR SENATOR HANABUSA: Members,
10 we'll be taking a short break to give the court reporter
11 some rest. We'll be back in -- I don't know why I keep
12 saying this, it never works, but we'll be back in five
13 minutes.
14 (Recess.)
15 CO-CHAIR SENATOR HANABUSA: Okay,
16 members, we can reconvene.
17 Q. All right. Ms. Yoshioka, having had the break
18 to review that paragraph, would you like me to repeat the
19 question or --
20 A. Please.
21 Q. What it appears to me is the paragraph provides
22 that if, for example, a teacher, a special ed teacher is
23 terminated and the person wants to make a claim for
24 breach of contract or whatever it might be, any costs
25 that are incurred under the contract such as paying it to
Page 208
1 the total amount of the contract, whatever it was, if
2 there are any attorneys' fees or costs of settling the
3 claim, these claims, all of those types of items would be
4 paid by the State of Hawaii?
5 A. Yeah, based on --
6 Q. Under this contract?
7 A. Yes. Based on the general conditions, that
8 would be a true statement.
9 Q. And -- but the negotiation of those, those
10 terms would be by Columbus, would it not?
11 A. According to the general conditions, yes.
12 Q. And Columbus even reserved the right for itself
13 to get an anticipatory profit, in other words, if in fact
14 they would have gotten the larger profit if the contract
15 had continued on, they -- they preserved for themselves
16 an anticipatory profit at a fair and reasonable amount,
17 is that correct, under B, 3B?
18 A. 3B. Yes.
19 Q. Did you discuss what that fair and reasonable
20 profit would have been percentage wise, was that ever
21 discussed?
22 A. No. Again, when we looked at reasonableness of
23 the contract, we looked at what management -- the percent
24 of management costs, the total, if I recall, was around
25 14 percent, that didn't appear to be unreasonable, so
Page 209
1 that was the benchmark.
2 Q. You did actually look at that as a benchmark
3 for a fair and reasonable profit under provision 3B?
4 A. No, maybe I could explain something. Going
5 back to my original testimony earlier, we attached the
6 general conditions because essentially all State
7 contracts have these general conditions to protect the
8 State. Given the time that I was under to meet the court
9 deadline, there wasn't -- there wasn't a large discussion
10 with anybody about these conditions, they were part of
11 State contracts and therefore included.
12 Q. I see. I have no further questions. Thank
13 you.
14 CO-CHAIR SENATOR HANABUSA: Thank you.
15 Members? Members with follow up? We'll start with Vice
16 Chair Kokubun followed by Vice-Chair Oshiro.
17 VICE-CHAIR SENATOR KOKUBUN: Thank you.
18 BY VICE-CHAIR SENATOR KOKUBUN:
19 Q. I just wanted to clarify again.
20 A. Sure.
21 Q. You know, the role of the superintendent in
22 this, you know. It seems, as I think you indicated
23 earlier, that he had no role in terms of the contract and
24 the negotiations and --
25 A. Well, he signs the contract.
Page 210
1 Q. Right.
2 A. I mean he is the superintendent and he signs
3 the contract for the department. Our job was to keep him
4 apprised of how we were meeting benchmark dates. But
5 that's essentially his role as head of the department.
6 Q. Just to execute the contract?
7 A. Yeah. He doesn't -- he didn't get involved in
8 the negotiations or --
9 Q. He didn't set up any kind of budgetary
10 parameters?
11 A. No.
12 Q. The understanding was that he would utilize his
13 super powers to fund this contract?
14 A. Actually the super powers, as I understand
15 them, relate more to his ability to waive procurement in
16 this case, 103D, 103F. That's how I look at the super
17 powers, the so-called super powers.
18 Q. He must have indicated that he would be willing
19 to utilize that avenue?
20 A. In this case we had to because there was no way
21 we could bid.
22 Q. Right.
23 A. There was just -- there was no reasonable time
24 frame to bid this with.
25 Q. Okay. So from his -- and you know, I don't
Page 211
1 want to speculate about what his intentions were --
2 A. No.
3 Q. But it appears to me that what you're saying is
4 that as you indicated earlier, meet the benchmark, and he
5 would execute the contract, utilizing his procurement --
6 A. Yes.
7 Q. His new procurement powers?
8 A. Right.
9 Q. Other than that, no involvement?
10 A. No involvement.
11 Q. With respect to Dr. Groves, the court monitor,
12 his role was what in your mind?
13 A. In my mind, the call from Deputy Superintendent
14 Pat Hamamoto to Ivor Groves to ask for recommendations --
15 Q. Right.
16 A. Again, I don't know how that came back.
17 Q. Right.
18 A. Whether it was through him or somebody else,
19 but that was the extent that I know about.
20 Q. So you did not talk directly or meet directly
21 with Dr. Groves?
22 A. No, no.
23 Q. How about Mr. Portnoy, any other member of the
24 court, any other officer of the court, Mr. Portnoy?
25 A. No. No.
Page 212
1 Q. Okay, thank you.
2 CO-CHAIR SENATOR HANABUSA: Vice-Chair
3 Oshiro.
4 VICE-CHAIR REPRESENTATIVE OSHIRO:
5 Thank you, Co-Chair Hanabusa.
6 BY VICE-CHAIR REPRESENTATIVE OSHIRO:
7 Q. I just wanted to get a little bit more
8 clarification on the circumstances behind how we entered
9 this contract. As I understand it, you said that we had
10 some sort of lack of information about how behind we were
11 in getting these teachers and therefore, we entered the
12 stipulation, we didn't think we were under that much
13 strain but it turned out to be a lot more of a strain, in
14 reality?
15 A. No. The timing was such that we didn't know
16 that we were at 67 percent until very late July, the end
17 of July. And from that perspective you can -- we can
18 calculate easily enough how many teachers were actually
19 behind and that's what drove the 383 number.
20 Q. Okay. And then as I understand it, a call was
21 made by Miss Hamamoto to Dr. Groves and he made a
22 recommendation of Columbus, and thereafter on or about
23 September 1, entered this contract with Columbus, is that
24 correct?
25 A. Right. The way that worked was that she did
Page 213
1 call the monitor to ask for recommendations. I don't
2 know what transpired between that and it coming back to
3 me that the recommendation was Columbus. The benchmark
4 by the Federal Court was to have a mainland recruitment
5 firm in place by August 15. The wording, exact wording
6 is retained.
7 Q. Okay. But between the original contract being
8 in September and the amended contract being in January,
9 the amount of referrals was changed from 380 to 138, is
10 that correct?
11 A. Right.
12 Q. Now, where is that difference of about 250,
13 where would that have been, where would those teachers
14 have been?
15 A. On Oahu.
16 Q. Through who?
17 A. All through Oahu.
18 Q. Through the DOE itself or through Columbus?
19 A. No, oh, I'm sorry. The balance of the teachers
20 in terms of where we needed to find them were for schools
21 on Oahu. And the recruitment efforts were to be made
22 through the department.
23 Q. Okay. I guess because my -- I guess I'm a
24 little confused in that initially we had this need, this
25 really overextended need for 380 teachers, and by January
Page 214
1 we figured out that somehow Columbus would only find 138
2 and essentially 250 would be found on Oahu, but despite
3 all of that, I mean you've talked about how competitive
4 the nature of recruiting is and how there was such a fear
5 of noncompliance. Why didn't we try and explore other
6 recruiters, for example?
7 A. We did, but to go back to your question about
8 Oahu, the success rate for the department is greater in
9 recruiting for Oahu than it is for the outer islands, and
10 so we thought that the department would have a good
11 chance of trying to recruit for those positions in the
12 fall and spring when we go out.
13 Q. Did we know that at the time that we entered
14 into the contract with Columbus that we had this kind of
15 infrastructure availability on Oahu?
16 A. Well, the confusion actually went back to the
17 way the stipulation was worded, that our initial -- and
18 in fact, the information that we didn't have.
19 Q. So -- I'm sorry, but my time is up, so had the
20 contract just -- the benchmark essentially said we needed
21 to find 380 but not necessarily that we needed to retain
22 a mainland recruiting --
23 A. No.
24 Q. -- organization, would that have rectified the
25 matter in any way?
Page 215
1 A. Would that have rectified the matter in any
2 way?
3 Q. I mean considering you said we had this sort of
4 availability of 250 on Oahu?
5 A. Actually --
6 Q. Anyway.
7 A. The word -- the appropriate -- maybe to
8 clarify, the 250 doesn't relate to availability. The 250
9 relates to vacant positions on Oahu, special ed teacher
10 positions that we as a department would have to fill in
11 order to meet the 85 percent benchmark. Does that answer
12 your question? It's not an availability of positions,
13 it's actually vacant positions.
14 Q. Well, my time is up.
15 A. Does that make sense? I'm sorry.
16 VICE-CHAIR REPRESENTATIVE OSHIRO:
17 Thank you.
18 CO-CHAIR SENATOR HANABUSA: Senator
19 Slom, do you have a follow up?
20 SENATOR SLOM: No.
21 CO-CHAIR SENATOR HANABUSA: Senator
22 Matsuura followed by Representative Ito. Do you have a
23 follow up?
24 REPRESENTATIVE ITO: No.
25 REPRESENTATIVE KAWAKAMI: No.
Page 216
1 CO-CHAIR SENATOR HANABUSA:
2 Representative Marumoto.
3 SENATOR MATSUURA: Thank you, Co-Chair.
4 BY SENATOR MATSUURA:
5 Q. Miss Yoshioka, I just need to -- my business
6 hat kind of just clicked on, and I just need to clarify
7 what I've been hearing from your testimony. On the
8 initial contract of 112 million dollars to contract out
9 380 special ed teachers to Columbus, we gave 128 million
10 dollar contract to Columbus to get 382 special ed
11 teachers or something to that degree, 100 million for 380
12 teachers. Following up from Barbara Marumoto, also gave
13 to the company that does not specialize in getting
14 special ed teachers, we give them like what,
15 Representative Marumoto said 40 million say for salaries
16 where there's no risk, we pay for everything, we pay them
17 60 million on top of that to get the 382 teachers without
18 any obligation or risk upon their part. In fact, after
19 Counsel Kawashima, there's a liability on our State, so
20 in actuality in worse case scenario without any
21 obligation to get a teacher, we could have had no
22 teachers, they could have used 60 million dollars of our
23 State taxpayers' dollars and gotten us zero teachers.
24 That could be a reality.
25 A. Well, except the department in discussions with
Page 217
1 Columbus said, you know, we're going to be watching.
2 Q. No, but in reality, in reality we gave them 68 --
3 60 million dollars to find 382 teachers?
4 A. I'm sorry. Where do you get the 60 million?
5 Q. You say -- we were following up on
6 Representative Marumoto, 380 teachers.
7 A. Right.
8 Q. At 100,000 each, that's about roughly 40
9 million?
10 A. Oh, I see what you're saying, for salaries.
11 Right.
12 Q. So we've got 60 million left of that 100
13 million dollar contract. Theoretically, that 60 million
14 dollars is to recruit the 382, so in actuality, if they
15 got all -- if they executed the whole contract, we got
16 382 teachers, we spent 100 million dollars, so actually
17 each one of those teachers didn't cost us 100,000, it
18 cost us upwards of $250,000 per teacher?
19 A. Right, but you know --
20 Q. I mean --
21 A. From a monitoring perspective, the department --
22 Q. From a pure math perspective --
23 A. We would not have let it go like that, would
24 not --
25 Q. But the contract is written that way, if we
Page 218
1 actually executed that contract to the T, over the three
2 years, but in actuality we could have -- since there was
3 no obligation on Columbus to obtain any teachers, we
4 could have spent 60 million over the next three years and
5 gotten nothing?
6 A. We could have. Sure.
7 Q. Thank you.
8 CO-CHAIR SENATOR HANABUSA: Anything
9 else? Representative Marumoto followed by Senator
10 Sakamoto.
11 BY REPRESENTATIVE MARUMOTO:
12 Q. I guess the only good news to that is
13 apparently we only had to pay for the teachers that were
14 recruited, correct?
15 A. Right.
16 Q. And the contract itself was ratcheted down to
17 40 million dollars, correct?
18 A. Right, and the management costs also go down
19 because after you have teachers here, there's not the
20 need to go and do all the recruitment activity. What you
21 basically have left are the teachers' salary package,
22 right.
23 Q. How much was actually appropriated for the
24 Columbus contract?
25 A. I'm sorry, that was -- that's a question the
Page 219
1 department will have to answer. I'm not sure what
2 ultimately got appropriated in the end.
3 Q. Who was sort of watching over this contract,
4 the numbers, what offices --
5 A. Yeah.
6 Q. -- has to do that?
7 A. Deputy Superintendent Pat Hamamoto had the
8 overall responsibility, but the actual preparation of
9 budgetary documents came from the planning, PBRD,
10 Planning Budget and Resource Development office. It's
11 sort of the budget arm of the department.
12 Q. Do you happen to know how much of that money
13 was actually utilized for this contract?
14 A. When I left the department in May, I think the
15 department had spent about four million.
16 Q. Only four million?
17 A. That was my recollection, but I think the
18 numbers better come from the department.
19 Q. So obviously, there was some money that was
20 left over?
21 A. Yes. That would make sense.
22 Q. So it probably lapsed?
23 A. That would make sense.
24 Q. Was it -- you wouldn't know whether it was part
25 of that 17 million dollars that was lapsed?
Page 220
1 A. No. Yeah. And I'm not comfortable answering
2 that either. The department budget folks would have to
3 give you the best answer.
4 Q. Offhand, do you know how many teachers were
5 hired and how many are still retained?
6 A. My understanding is that they have fulfilled
7 the contract requirements of 138 teachers.
8 Q. And are they all still on staff?
9 A. The department would be best to tell you that.
10 I don't know.
11 Q. Okay. Thank you very much.
12 A. I believe so but I don't know.
13 Q. Thank you very much.
14 CO-CHAIR SENATOR HANABUSA: Senator
15 Sakamoto?
16 SENATOR SAKAMOTO: Thank you, Chair.
17 BY SENATOR SAKAMOTO:
18 Q. Miss Yoshioka, I hear over and over, I guess
19 the time pressure on you and whoever else really was a
20 problem at the time, and the August 15 date or September
21 1 dates were just looming. When was the benchmark that
22 mandated we retain a mainland recruiting firm, when was
23 that sent down?
24 A. That was signed by Judge Ezra on August 2.
25 There was a stipulation -- I think there was a hearing
Page 221
1 that day and the stipulation that was dated August 2.
2 Q. So Judge Ezra expected us between August 2 and
3 August 15 to retain a mainland firm and possibly contract
4 out up to 102 plus million dollars, was that his
5 intention?
6 A. I'm not -- I don't know if I can speak for
7 Judge Ezra, but the benchmarks were clearly laid out that
8 we had to maintain -- or retain this firm.
9 Q. And is it your feeling that the court, whether
10 it's Ezra or the monitor or Groves or others, knew that
11 the 67 percent was the factor as opposed to the 88
12 percent at the time the August 2 mandate was made?
13 A. Yeah, I don't know what communications had
14 lapsed. My own sense, and I was trying to recall for
15 myself, my own sense was that it was too late.
16 Q. I guess my question was do you feel the court
17 knew, whether it's the monitor or Mr. Portnoy or Judge
18 Ezra, knew that it indeed was 67 percent versus a
19 previous higher number?
20 A. I don't know. I really don't know.
21 Q. Okay, thank you. Changing from -- you
22 mentioned, you know, the teacher cadet program, high
23 school program. At this point in time, assuming most, if
24 not all of the Columbus recruited teachers elect to
25 return to wherever they came from or leave Hawaii for
Page 222
1 whatever reason, who is currently responsible to fill
2 those seats, because we already now have a time frame 36
3 months hence the person was recruited, there will
4 probably be that vacancy. If we make that assumption,
5 who's currently responsible to fill that seat?
6 A. The department has an organization that's
7 appended to personnel called the Center for Support
8 Services. And I brought -- actually I wanted to leave
9 this for the committee, and I will do that, but there is
10 a recruitment continuum, and I know this is really hard,
11 I apologize, you won't be able to see it, but there's a
12 recruitment continuum that is designed now by the
13 department that lays out all the strategies required in
14 order to successfully be a recruiting department. Many
15 of these things are in place and I'm sure the department
16 can give you really a very good briefing about where they
17 are, but the idea is that in order to have our own
18 capacity, which is going to take time, that we have to
19 start on these things yesterday. Clearly, yesterday. So
20 I won't take the committee's time, but I'll leave this
21 with you, and I'm sure the department can give you a
22 briefing about where they are on each one of these steps.
23 Q. I guess who would be responsible as we look at
24 accountability and responsibility? On one hand, we could
25 say the governor is responsible for everything, on the
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1 other hand we could say Herb Nakashima is responsible for
2 everything or we could say Pat Hamamoto is responsible
3 for everything --
4 A. Yeah.
5 Q. So I'm wondering who would be responsible for
6 this particular effort and its success, because ideally
7 we want to succeed and feel succeed --
8 A. Right.
9 Q. Because we already have a time frame.
10 A. Right. Well, as I indicated, you're right, I
11 don't know that you would singularly identify anybody,
12 but the department, I believe, has the right plans in
13 place now, they have an entity that is devoted to that,
14 and so I'm hopeful.
15 Q. That's good. I see. Thank you.
16 SENATOR SAKAMOTO: Thank you, Chair.
17 CO-CHAIR SENATOR HANABUSA: Thank you.
18 Vice-Chair Saiki, do you have any follow up questions?
19 BY CO-CHAIR REPRESENTATIVE SAIKI:
20 Q. Miss Yoshioka, Mr. Koyama had found in his
21 audit that there was approximately $290,000 worth of lap
22 top computers that were purchased for vacant positions.
23 Are you aware of that finding?
24 A. I'm aware of lap top computers for principals.
25 Q. There were lap tops issued to vacant SPED --
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1 CO-CHAIR SENATOR HANABUSA: Special ed
2 positions.
3 Q. Vacant SPED positions.
4 A. Vacant SPED positions?
5 Q. It says lap tops issued to vacant SPED?
6 A. I am aware of lap tops that were issued for
7 principals' use and lap tops that were -- my
8 recollection, lap tops for SPED teachers used at the
9 complex level. That's my recollection.
10 Q. Were those vacant positions?
11 A. I don't believe so. I think the department
12 could better answer that, but I don't believe so.
13 Q. Do you know whether any of these lap tops were
14 provided to the 250 Oahu based special ed teachers?
15 A. No, I don't, but there was another organization
16 of the department responsible for the -- actually the
17 dissemination of those lap tops.
18 Q. What department, what division is that?
19 A. It fell under Division of Learner Teacher
20 Support Services, I believe their MIS organizational arm
21 of the department.
22 Q. Who's responsible for that division?
23 A. I'm not sure, I don't remember. I don't know
24 the name.
25 Q. Okay. Thank you.
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1 BY CO-CHAIR SENATOR HANABUSA:
2 Q. Ms. Yoshioka, in your response to Co-Chair
3 Saiki's questioning prior to this, you said that there
4 were incentives for local teachers.
5 A. Right.
6 Q. Correct? Now, I'm looking at what was given to
7 us as a summary by the Department of Education, and this
8 is priority seven of the FRP, and it says like $5,000 per
9 year placement incentive for licensed special education
10 teachers serving children on Lanai and Molokai and in
11 Hana, Kohala and Ka'u. Is that what you're referring to?
12 A. Yes. That's the FRP seven that you have,
13 right.
14 Q. And that would be not for the Columbus teachers --
15 A. Right.
16 Q. -- but for local teachers, correct?
17 A. Right.
18 Q. It says $2,000 per year placement incentive for
19 licensed general education teachers serving children with
20 disability on Lanai and Molokai and in Hana, Kohala and
21 Ka'u. That's another category.
22 A. Right. All of those incentives that you're
23 reading from are for Hawaii teachers.
24 Q. And there's incentives in here like $1,000 per
25 licensed special education teacher serving as monitors or
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1 cooperating teachers for university program -- mentors?
2 A. Mentors.
3 Q. Mentors?
4 A. Right.
5 Q. Yes.
6 A. Right.
7 Q. And those are the kinds of incentives that
8 you're talking about?
9 A. Right.
10 Q. So I have A to M here as different kinds of
11 incentives, including things like pre special ed
12 prerequisite courses at the University of Hawaii?
13 A. Right.
14 Q. And these are what we offered our local
15 teachers versus what the Columbus group offered theirs?
16 A. Right. Right.
17 Q. Was there any consideration given to what would
18 happen after the three year Columbus group contract is
19 over and we now have arguably at that point, expectation
20 was 380 teachers, then it went down to 138, what was
21 going to happen at the end of that three years?
22 A. Yeah. The department, as I stated earlier, is
23 in -- the work in progress is about developing a real
24 recruitment department, developing a continuum so that
25 even though you're recruiting on the front end, you're
Page 227
1 not losing them on the back end. And so there are a lot
2 of things in place, for example, every time a teacher
3 leaves, I started a process by which we would call that
4 teacher and find out why they are leaving. What are the
5 reasons why you're leaving your position. Where are you
6 going, what are some of the reasons why you're leaving,
7 and so there's a lot of things in place that would
8 hopefully help the department to not only recruit, but
9 retain teachers. The hope is that the department will
10 have the capacity to fill its own three years down the
11 road. I mean that is the optimistic hope, that we're
12 going to be able to do that.
13 Q. Was there any discussion with the HSTA about if
14 these teachers decided to stay, that they would have
15 lateral movement, they would be given the seniority for
16 the period of time?
17 A. No.
18 Q. Nothing like that?
19 A. No. No. Those teachers would have to apply
20 like any other teacher coming into the system.
21 Q. So they would -- they have had this automatic
22 in based almost with the Columbus contract, but once it
23 expires they must stand in line like any other teacher?
24 A. Yes.
25 Q. Is that it?
Page 228
1 A. Yes.
2 Q. Thank you very much.
3 CO-CHAIR SENATOR HANABUSA: Anyone
4 else? If not, members, we are -- the Chairs are going to
5 make a recommendation that we go into executive session
6 again. We've got an indication that Judge Ezra has
7 ruled, so we would like to have us convene in executive
8 session. That's the motion of the Chairs.
9 Q. Oh, Miss Yoshioka, thank you very much. You
10 are excused, and whatever information you would like to
11 leave, we'll have someone come to you and pick it up from
12 you.
13 SPECIAL COUNSEL KAWASHIMA: Maybe you
14 ought to state, Madam Chair, for the record, Miss
15 Yoshioka agreed to appear without subpoena and waiving
16 notice to be here through her attorney, right? Thank
17 you.
18 CO-CHAIR SENATOR HANABUSA: Thank you
19 very much. Members -- members, again, we have the motion
20 pending, which is by the Co-Chairs that we convene in
21 executive session. Is there any discussion? If not,
22 Co-Chair Saiki?
23 CO-CHAIR REPRESENTATIVE SAIKI:
24 Co-Chair Hanabusa?
25 CO-CHAIR SENATOR HANABUSA: Aye.
Page 229
1 CO-CHAIR REPRESENTATIVE SAIKI:
2 vice-Chair Kokubun?
3 VICE-CHAIR SENATOR KOKUBUN: Aye.
4 CO-CHAIR REPRESENTATIVE SAIKI:
5 Vice-Chair Oshiro?
6 VICE-CHAIR REPRESENTATIVE OSHIRO: Aye.
7 CO-CHAIR REPRESENTATIVE SAIKI: Senator
8 Buen?
9 SENATOR BUEN: Aye.
10 CO-CHAIR REPRESENTATIVE SAIKI:
11 Representative Ito?
12 REPRESENTATIVE ITO: Aye.
13 CO-CHAIR REPRESENTATIVE SAIKI:
14 Representative Kawakami?
15 REPRESENTATIVE KAWAKAMI: Aye.
16 CO-CHAIR REPRESENTATIVE SAIKI:
17 Representative Leong?
18 REPRESENTATIVE LEONG: Aye.
19 CO-CHAIR REPRESENTATIVE SAIKI:
20 Representative Marumoto?
21 REPRESENTATIVE MARUMOTO: Aye.
22 CO-CHAIR REPRESENTATIVE SAIKI: Senator
23 Matsuura?
24 SENATOR MATSUURA: Aye.
25 CO-CHAIR REPRESENTATIVE SAIKI: Senator
Page 230
1 Sakamoto?
2 SENATOR SAKAMOTO: Aye.
3 CO-CHAIR REPRESENTATIVE SAIKI: Senator
4 Slom?
5 SENATOR SLOM: Aye.
6 CO-CHAIR REPRESENTATIVE SAIKI: Twelve
7 ayes.
8 CO-CHAIR SENATOR HANABUSA: Thank you.
9 We will be convening in the room next door, members, and
10 this hearing will reconvene again on Friday at one
11 o'clock. And members, for your information and for the
12 public, pursuant to Rule 2.5, the rules of this
13 committee, the Co-Chairs have waived the time requirement
14 on the notice, and the reason why is we are adding Miss
15 Brogan to the Friday agenda because she has kindly agreed
16 to return, so you will see a new posting. Thank you,
17 members. Thank you, members of the public.
18 (Hearing concluded at 4:07 p.m.)
Page 231
1 C E R T I F I C A T E
2 STATE OF HAWAII )
3 ) SS.
4 CITY AND COUNTY OF HONOLULU )
5 I, SHIRLEY L. KEYS, Notary Public, State of
6 Hawaii, do hereby certify:
7 That the hearing was taken down by me in
8 machine shorthand and was thereafter reduced to
9 typewriting under my supervision; that the foregoing
10 represents to the best of my ability, a true and correct
11 transcript of the proceedings had in the foregoing
12 matter.
13 I further certify that I am not an attorney
14 for any of the parties hereto, nor in any way concerned
15 with the cause.
16 DATED this ______ day of _____________, 2001,
17 in Honolulu, Hawaii.
18 ______________________________
SHIRLEY L. KEYS, CSR 383
19 Notary Public, State of Hawaii
My Commission Exp. May 19, 2003
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