1
1
2
3 SENATE/HOUSE OF REPRESENTATIVES
4 THE 21ST LEGISLATURE
5 INTERIM OF 2001
6
7
8
9 JOINT SENATE-HOUSE INVESTIGATIVE COMMITTEE HEARING
10 NOVEMBER 16, 2001
11
12
13
14 Taken at the State Capitol, 415 South Beretania,
15 Conference Room 325, Honolulu, Hawaii commencing at
16 9:11 a.m. on Friday, November 16, 2001.
17
18
19
20 BEFORE: MYRLA R. SEGAWA, CSR No. 397
21 Notary Public, State of Hawaii
22
23
24
25
2
1 APPEARANCES:
2
3 Senate-House Investigative Committee:
4 Co-Chair Senator Colleen Hanabusa
5 Co-Chair Representative Scott Saiki
6 Senator Jan Yagi Buen
7 Representative Ken Ito
8 Representative Bertha Kawakami
9 Representative Bertha Leong
10 Senator Norman Sakamoto
11 Senator Sam Slom
12
13 Also Present:
14 Special Counsel James Kawashima
15
16
17
18
19
20
21
22
23
24
25
3
1 I N D E X
2
3 WITNESS: MARION HIGA
4 EXAMINATION BY: PAGE
5 SPECIAL COUNSEL KAWASHIMA.................5
6 REPRESENTATIVE ITO.......................44
7 SENATOR BUEN.............................51
8 REPRESENTATIVE KAWAKAMI..................55
9 SENATOR SLOM.............................62
10 REPRESENTATIVE LEONG.....................71
11 SENATOR SAKAMOTO.........................75
12 CO-CHAIR HANABUSA........................86
13 CO-CHAIR REPRESENTATIVE SAIKI............96
14 SENATOR SLOM............................102
15 REPRESENTATIVE ITO......................109
16 REPRESENTATIVE KAWAKAMI.................111
17 SENATOR SAKAMOTO........................112
18
19
20
21
22
23
24
25
4
1 P R O C E E D I N G S
2 CO-CHAIR REPRESENTATIVE SAIKI: Good
3 morning. We'd like to reconvene our Joint
4 Senate-House investigate committee to investigate the
5 State's efforts to comply with the Felix Consent
6 Decree. We'll begin with a roll call.
7 CO-CHAIR SENATOR HANABUSA: Co-Chair
8 Saiki?
9 CO-CHAIR REPRESENTATIVE SAIKI: Present.
10 CO-CHAIR SENATOR HANABUSA: Vice-Chair
11 Kokubun is excused. Vice-Chair Oshiro is excused.
12 Senator Buen?
13 SENATOR BUEN: Here.
14 CO-CHAIR SENATOR HANABUSA:
15 Representative Ito?
16 REPRESENTATIVE ITO: Here.
17 CO-CHAIR SENATOR HANABUSA:
18 Representative Kawakami?
19 REPRESENTATIVE KAWAKAMI: Here.
20 CO-CHAIR SENATOR HANABUSA:
21 Representative Leong?
22 REPRESENTATIVE LEONG: Here.
23 CO-CHAIR SENATOR HANABUSA:
24 Representative Marumoto is excused. Senator
25 Matsuura is excused. Senator Sakamoto is excused.
5
1 Senator Slom?
2 SENATOR SLOM: Here.
3 CO-CHAIR SENATOR HANABUSA: We have a
4 quorum.
5 CO-CHAIR REPRESENTATIVE SAIKI: Members,
6 our witness for today is Ms. Marion Higa, the state
7 auditor. Ms. Higa is seated at the witness table and
8 we'll administer the oath at this time.
9 CO-CHAIR SENATOR HANABUSA: Ms. Higa, do
10 you solemnly swear or affirm that the testimony
11 you're about to give will be the truth, the whole
12 truth and nothing but the truth?
13 THE WITNESS: Yes, I do.
14 CO-CHAIR SENATOR HANABUSA: Thank you
15 very much. Mr. Kawashima will begin in the usual
16 format what this committee has done in the past.
17 Mr. Kawashima.
18 SPECIAL COUNSEL KAWASHIMA: Thank you,
19 Madam Chair.
20 EXAMINATION
21 BY SPECIAL COUNSEL KAWASHIMA:
22 Q. Please state your name and business
23 address.
24 A. Yes, my name is Marion M. Higa. My
25 office address is 465 South King Street, Room 500,
6
1 Honolulu 96813.
2 Q. And again, your position with the state
3 of Hawaii is what?
4 A. I'm the state auditor.
5 Q. Now, perhaps you can describe for us,
6 Ms. Higa, the role that your office played in
7 connection with this committee's inquiry.
8 A. Yes. We were asked by leadership upon
9 the formation of the committee to serve as staff to
10 the committee in the Felix investigation and
11 information gathering and work with the committee
12 chairs, co-chairs and members of the committee in
13 doing its work until the end.
14 Q. Now, you had -- your office had completed
15 audits, had it not, even prior to taking on this task
16 here.
17 A. Yes. As I recounted when I testified
18 before you back in July, we had done at least three
19 audits directly related to Felix or in the last case
20 had a consultant do it with us. Earlier we had also
21 done some other audits more specifically of the
22 Department of Education and Health that related to
23 the mental health area, yeah; so we had some
24 expertise within the staff. We had a great deal of
25 familiarity with the subject.
7
1 Q. Familiarity with the decree, its
2 background and the issues presented to the DOE and
3 the DOH by the decree, those matters?
4 A. Yes. And as I understood it, the
5 committee was particularly interested in using our
6 reports as a springboard for its work.
7 Q. So what kinds of things, then, did your
8 office do to assist this committee, Ms. Higa?
9 A. We initially talked with departmental
10 officials, the two primary departments, other state
11 officials. We began to talk to people from within
12 the different departments and it soon became apparent
13 that there were a number of people who then wanted to
14 talk to us. So we began to get anonymous
15 information, information that people asked us to hold
16 confidential.
17 They asked us to meet with them off site,
18 off hours and we proceeded from there in trying to
19 sort through this information and make our
20 recommendations to the committee as to which
21 witnesses might be subpoenaed and which ones might
22 appear before you.
23 Q. Now, these contacts you're referring to
24 they were telephone calls predominantly?
25 A. Telephone calls, E-mails, letters. As I
8
1 said, some of them were anonymous. We didn't keep a
2 log of the number of calls because for one thing we
3 didn't expect as many as we got. We did go back and
4 look at how many people we talked to and we figured
5 it's about 40 people we talked to. We had about 25
6 meetings with people.
7 Many of the calls were multiple times
8 with some of these sources. As I said, people asked
9 to meet with us off site and off hours which we did.
10 Some of the phone calls were an hour to an
11 hour-and-a-half long.
12 Q. By the way, Ms. Higa, all of these
13 contacts, my understanding is that they were
14 unsolicited contacts?
15 A. Yes and no. In some cases someone would
16 tell us that we should talk to so and so because so
17 and so has more information than the original caller;
18 so in that case we would have to call the second
19 person and in some cases there was a great deal of
20 reluctance to talk to us. There is a great deal of
21 fear out there both for their jobs as well as their
22 relationships with their colleagues.
23 Q. All right. Now, we understand also that
24 you requested documents from the involved
25 departments, education and health and reviewed those
9
1 documents and received also various auditing
2 techniques and analyses?
3 A. Yes, we did receive the documents. Some
4 of them primarily they came as a result of subpoenas
5 from the committee, but we also were able to get
6 additional documents that we asked the departments
7 for and by and large they cooperated.
8 Q. All right. Now you mentioned -- you
9 testified a few minutes ago that a rough estimate of
10 the number of telephone calls you had from different
11 people you estimated as many as 40 different people;
12 is that correct?
13 A. Yes.
14 Q. And some multiple times?
15 A. Yes.
16 Q. And then you met with you said over 25
17 people?
18 A. Yes.
19 Q. Actual meetings again sometimes multiple
20 times?
21 A. Yes.
22 Q. What did you learn, then, in a general
23 way, what did you learn from these contacts from
24 these people either by telephone or in person?
25 A. Generally as I started out saying back in
10
1 July we found that there is a culture of profit out
2 there that very often you see the education community
3 and the health provider community is a fairly tight
4 community, and there are practices going on there
5 which seem to be known within their own communities
6 but not generally known outside those communities.
7 And as a general statement for instance, I would say
8 that we found that on the health side the providers
9 had figured out that they are basically policing
10 themselves as far as billing is concerned. I think
11 later on maybe I can get into some of the details and
12 the kinds of billing data that we did generate.
13 On the health side there is also
14 apparently common knowledge of the superintendent's
15 admitted relationship -- the former superintendent's
16 admitted relationship with the person to whom he
17 eventually was able to get a contract to.
18 As I said, once we started talking to
19 people, they were surprised that the rest of us
20 didn't know about some of these practices.
21 Q. All right. Now, as far as these people
22 who contacted you or people in your office were
23 concerned, what, if anything, did they describe to
24 you as to whether or not they're happy or unhappy
25 with the fact that this investigation was ongoing?
11
1 A. Many of the people, and I would like to
2 think that they are the ones who are perhaps the more
3 honest ones out there -- they're very happy that the
4 committee was formed, that these questions were being
5 asked and that the information was becoming public
6 because even though many of them were part of the
7 system and could eventually be perhaps painted by any
8 findings that the committee comes up with, they
9 basically felt that what was happening was wrong and
10 they wanted to see some of these practices stopped.
11 Now, on the other hand we also had a
12 great deal of resistance. We had people who knew
13 that if this information came forth, there would be
14 consequences, adverse consequences for them; so there
15 was resistance so we had to get past and deal with
16 that and I'm not sure that we did succeed entirely.
17 I know we did not succeed entirely as a matter of
18 fact.
19 Q. Now, I understand also, though, your
20 staff spent numerous hours also examining records and
21 being a part of the process. Do you have an estimate
22 for us as to how many hours your staff worked?
23 A. It's a little hard to judge. I had four
24 staff on this full-time from -- well, three staff
25 full-time from early June and the fourth member was
12
1 added from the middle of September, and I have
2 devoted a great deal more time to this engagement
3 than I normally do. I was much more hands-on to this
4 assignment from the legislature than I will normally
5 exercise.
6 Q. Now, as your office developed this
7 information, though, whether it be from witnesses or
8 from review, a review of documents, what did you do
9 with that information?
10 A. Well, in the executive sessions and in
11 many conversations with the co-chairs, we shared the
12 salient points of our information. There was a great
13 deal of exchange in information via E-mail. Thank
14 goodness for E-mail. We were able to also work with
15 counsel and his staff in trying to sort through this
16 information. And as I've said to some of the
17 committee members throughout the months, this is like
18 peeling an onion.
19 If you peel one layer and you find
20 something more, then you have to keep going after it
21 and going after it until the pieces, you know, what
22 you might have on the table is a bunch of pieces but
23 then you might be able to put those pieces back
24 together again and understand how relationships mean
25 something by the time you're done. I think we're
13
1 reaching that point.
2 Q. All right. Now, you mentioned, Ms. Higa,
3 that you were not able to get all the information you
4 wanted; is that correct?
5 A. That's true.
6 Q. And why is this, why were you not able to
7 get that information?
8 A. In some respects I would attribute this
9 to the actions of the federal court. We were not
10 able to get the information that concerned the
11 federal monitor and his office. As you know, we
12 tried to get information that should be provided by
13 any non-profit organization. That was denied us.
14 We were looking for information on the
15 operations of that office, the billings, the
16 expenses, the monitor's private business, the service
17 testing instrument that was developed. You might
18 recall that we had one testifier who claimed that
19 actually the genesis of the service testing
20 instrument was really the result of DOE officials
21 discussions with the court monitor, and they were
22 surprised to suddenly find that an instrument had
23 been copyrighted under the name of the court
24 monitor's private business.
25 We wanted to get at exactly what the role
14
1 of the court monitor's partner was here. He made
2 numerous training trips here as we can tell from the
3 records, but all these questions could not be posed.
4 Q. I will get more into that, Ms. Higa, as
5 we go on now. Perhaps you can provide us with some
6 examples of areas where you did obtain information in
7 areas where you were not able to obtain information
8 that you wanted to obtain.
9 A. I think one of the significant areas that
10 this committee was able to get was from the
11 Department of Education and admission that when you
12 asked for information, you're asking for expenditure
13 information but they gave you budgeted information.
14 The admission that yes indeed parts of their
15 organization that due to the accounting are not the
16 same parts to the budgeting and the kind of
17 information you would normally expect that a key
18 financial officer would have is, in fact, very
19 difficult to obtain in the department. But at least
20 there is this kind of admission, and I think that was
21 a positive sign.
22 Q. Now, were there other areas, though,
23 where you obtained little or no information?
24 A. Well, yes. This has been a continuing
25 frustration for us, and it's an issue that I think is
15
1 still something we need to pursue. We have
2 encountered continued resistance from the Deputy
3 Attorney General assigned to Felix in giving us
4 access to information. And later on when I can have
5 a chance to give you some detail on the kind of
6 billing records that we've been analyzing, we were
7 trying to get to prove that services, in fact, may
8 not have been ordered that were delivered or more
9 services were delivered than were called for or
10 possibly eventually be able to look at whether
11 effective services are being delivered.
12 We're not interested in the children's
13 names. We're perfectly satisfied with the numerical
14 system that assigns numbers to the files. We thought
15 we had an agreement to let us have those files via
16 the numbers. As late as two days ago that was again
17 denied us; so we're back where we started. So we
18 cannot close the loop on proving that some of those
19 services were, in fact, unwarranted.
20 Q. Now, you testified earlier about the
21 court monitor and you just now testified about not
22 being able to get certain kinds of information. You
23 referred to a Mr. Ray Foster who you referred to as a
24 business partner of the court monitor Ivor Groves?
25 A. Yes.
16
1 Q. As far as that was concerned, Ms. Higa,
2 were there difficulties in that regard not being able
3 to place Ivor Groves and others Ms. Schrag under oath
4 and asked them questions about certain areas of
5 concern?
6 A. Yes, because in our investigation, we're
7 finding the same kinds -- same names appearing in
8 different places. And we're not sure if there is
9 this network being created and whether Hawaii is
10 being taken advantage of in the creation of this
11 network whether work is being funneled to people
12 within this network and whether, in fact, the
13 jurisdictions that then hire these people are getting
14 their money's worth. This is what we're trying to
15 learn. We can't, not without the kind of access we
16 believe we need.
17 Q. Now, part of the issue I believe,
18 Ms. Higa, was the fact that the federal court has
19 taken the position that Ivor Groves, for example,
20 Ms. Judith Schrag are judicial officers; is that
21 correct?
22 A. That's right.
23 Q. And by virtue of being judicial officers
24 they are accorded some level of limited immunity --
25 A. Yes.
17
1 Q. -- to testify; is that correct?
2 A. That's what I understand.
3 Q. To your understanding, though, are those
4 individuals who have been accorded this judicial
5 immunity to your understanding are they held to the
6 same ethical, judicial ethical codes that our judges
7 are held to?
8 A. That's my understanding, yes.
9 Q. So that these areas then of concern as to
10 whether or not they or their companies might be
11 personally involved those areas certainly would be an
12 area of concern you want to delve into but have been
13 prevented from doing so by these people given this
14 limited judicial immunity.
15 A. Yes, I would believe that would be the
16 committee's concern.
17 Q. All right. Now, initially, though, when
18 you started contacting people for information, did
19 you encounter resistance --
20 A. Yes.
21 Q. -- from the departments?
22 A. Yes, people were afraid, they're very
23 afraid for their jobs. And in fact as our work
24 proceeded, we did get indications that there were
25 threats of retribution.
18
1 Q. In that sense, there were some people
2 though who when subpoenaed came forward to testify?
3 A. Yes.
4 Q. Now, was part of your goal to see whether
5 or not there was a system of checks and balances in
6 place?
7 A. Yes, you know you might recall where this
8 committee started from. The committee started with
9 three goals. It wanted to look at the issues that
10 had come from our reports as I said earlier, and
11 those were the over identification of children into
12 the Felix class, conflicts of interest that we had
13 reported on and the issue of the expenditures where
14 had the money gone, what were we buying and did we
15 get value for our money. That's where we started.
16 I think basically it was difficult to get
17 at the first issue. We knew that from the very
18 beginning because of the difficulty in getting the
19 student files and for this committee's purposes it
20 seemed that that could be deferred at least for now
21 because the other two might be more germane to the
22 legislature's concerns, the immediate concerns going
23 into the next session. So we did consider all three
24 areas, but we did put some priority on conflicts and
25 expenditures.
19
1 Q. So your difficulty in investigating this
2 area of the over identification of Felix students
3 your difficulty here had to do with not being
4 provided adequate information to do the proper study
5 of this area?
6 A. Yes, to some extent and there again I
7 think it may tie to one recommendation I may make
8 later. You need to bring in some expertise to really
9 look at this issue, and I didn't feel that we had
10 enough time to do that during this interim and there
11 was just too much on the committee's plate already
12 with the other two areas because, as I said, once you
13 start peeling the onion, it was a very big onion with
14 many layers.
15 Q. Now, interim superintendent Pat Hamamoto
16 recently stated in an interview when talking about
17 the committee that when the legislature asked what we
18 expect we gave them what we budgeted.
19 Now Ms. Hamamoto admitted a more complete
20 picture needs to be presented. Is this one of the
21 things you're talking about?
22 A. Yes, I think that's one of the areas that
23 the committee should pursue and hold the department
24 to and work with the department in getting to this
25 better system for the department's own sake as well
20
1 as for the legislature.
2 Q. Now, I believe you've answered this,
3 Ms. Higa, but just to be sure do you believe a
4 complete picture has been painted?
5 A. Yes and no. We got some information and
6 it's not because we're insatiable about information
7 but I think there is a good deal of information that
8 is still to be uncovered.
9 Q. All right. Now, based on what you and
10 your staff have learned through this process
11 including the information obtained from witnesses at
12 hearings, do you have any recommendations for this
13 committee?
14 A. Yes. I think that's why we're at this
15 point.
16 Q. Right. Would you provide us with those?
17 A. I think the primary one and perhaps this
18 one overrides everything else is we need to develop a
19 system whereby the state has assurance that there is
20 accountability built in so that what you're paying
21 for is clear, what you're buying and how effective it
22 is and that you're getting value for your money.
23 That's what you need to have.
24 What we don't see is all the pieces for
25 that in place at the moment. That would be
21
1 overriding recommendation. If there was a theme,
2 that's where you need to go. And conflicts of
3 interest play a part here, organizational structure
4 plays a part here, role of the board plays a part
5 here but they all come to that overriding
6 recommendation.
7 Q. And what would that recommendation,
8 Ms. Higa, be based on?
9 A. Well, it would be based on some of the
10 areas that we've looked at, it would be based on
11 specific practices. I'll give you some examples.
12 For instance, we found in the Department of Health
13 there was a private provider who was allowed to be
14 accredited -- exempt from accreditation more than
15 once; so you wonder why is this happening. If I may,
16 I'd like to turn to some notes of some of the data
17 analysis that we did as a prefatory remark.
18 You know, I say sometimes technology is
19 wonderful and this was the case here. We have a
20 software program that allows us to sort lots of data.
21 And in this case we got a database from DOH of its
22 billings. The database has about a half million
23 records, and you can sort it in all kinds of ways and
24 fortunately I have some of my staff who can do this.
25 So we found, for instance, in one month
22
1 there was a therapist who was paid for 1,765 hours
2 and billed the state almost $60,000 for that month.
3 On a given day this person claims to have provided
4 seven hours of individual therapy, five hours of
5 group therapy, and 115 hours of biopsychosocial
6 rehabilitation for a total 127 hours in that one day.
7 This clinician is still providing services and is
8 still being paid by the state.
9 We have examples where there is a big
10 margin between what the employee providing the
11 services such as therapeutic aides and the heads of
12 the agency are charging the state for those same
13 services. We found one example in the clinical
14 standards, for instance, you're not allowed to have
15 intensive in-home services for more than 12 weeks at
16 a time and if you do, you have to get an exemption
17 from that requirement.
18 We found one provider where almost three
19 quarters of their clients were exceeding 12 weeks of
20 intensive in-home services. And for almost a fifth
21 of those services had gone on for a year. For this
22 the state pays $70.00 an hour and in one case one
23 client would cost the state $30,000. We don't know
24 what the list of services. There is a markup in the
25 case of a provider of 170 percent to 190 percent
23
1 between what they pay the employee and what they
2 charge the state.
3 Now, you heard testimony from provider
4 agencies that this margin could be explained by
5 training expenses and overhead expenses, but it's a
6 little difficult to believe that it takes 170 percent
7 markup to cover those expenses.
8 A last example for today we found one
9 case where a client got both intensive in-home
10 services which is supposed to be provided by both a
11 therapeutic aide and a therapist, but a case was
12 billed for both in-home services as well as
13 biopsychosocial services which cost the state $1,046
14 per day.
15 Now contrast that with acute psychiatric
16 hospitalization which costs the state $650 a day. So
17 you see these kinds of patterns when you look at the
18 data, and it's possible it can be done. The machine
19 does a lot of the work. I mean, you just program it
20 to give you the sorts as you want them, but you have
21 to look at the data that it then generates. You have
22 to ask questions. Why are these anomalies there?
23 That's what we've done in these last few years.
24 Q. Obviously Ms. Higa, one of the things you
25 are advocating is to have tighter controls over the
24
1 department.
2 A. Yes, definitely.
3 Q. Do you feel, though, by having these
4 tighter controls over the departments that it will
5 result in less services being provided to special
6 education students?
7 A. No, because if you had tighter controls,
8 you might be able to uncover the cheaters and the
9 exorbitant prices the state is paying unnecessarily
10 and thereby the dishonest folks might be driven out
11 of the system you'd have more money for the
12 legitimate needs.
13 Q. Now, do you have other recommendations,
14 Ms. Higa?
15 A. Yes. As I said, we did look at some
16 other areas and you know this was the first
17 recommendation was the overriding one, but turning to
18 the issue of conflicts of interest, I think there
19 needs to be more controls over conflicts of interest.
20 The state has some in place. We have the ethics
21 commission that was mentioned in the course of the
22 hearings. That doesn't necessarily seem to work
23 every time.
24 We had instances of a division chief
25 hiring her husband to run a multimillion dollar
25
1 experimental program within her division. It's not
2 good practice to permit that same division chief to
3 also allow a branch chief under her who oversees a
4 private provider to then enter into an arrangement
5 with that private provider whereby he gets free rent
6 to run his own private business.
7 We also have come across some data on
8 some suspicious relationships perhaps between that
9 providers and that branch chief and the kinds of
10 business in the way of that provider. It's not good
11 practice to allow a high official to enter into
12 contracts with those -- with whom there might be a
13 personal relationship despite the fact that staff
14 recommend not entering into that relationship.
15 These are also examples of conflicts
16 where you would think existing controls might work
17 but they haven't.
18 Q. Now, do you believe that implementing
19 tighter controls in this area of conflicts of
20 interest would in any way reduce services to special
21 education students?
22 A. There again it shouldn't because what
23 you're doing is enforcing a culture of honesty and a
24 requirement that people play by the rules. And that
25 result would still be that you have legitimate money
26
1 there for legitimate needs.
2 Q. All right. Are there any other
3 recommendations, Ms. Higa?
4 A. Well, I think another issue is within the
5 Department of Education as well as -- and this is all
6 legislative concern -- is the issue of the way money
7 is budgeted for special education. As you know,
8 several years ago the legislature created the program
9 identification number called it EDN 150. I believe
10 the intent was to be able to capture if not Felix
11 then Special Ed.
12 It's now titled comprehensive school
13 support services, and the department has an operation
14 what it calls the CSSS program which is the more
15 encompassing program. I believe the expenditures out
16 of here were about 248 million this last -- I'm
17 sorry, 178 million expenditures this last year. You
18 don't know what's in it.
19 And as for instance you heard from the
20 internal auditor when he was asked to audit just a
21 portion, a small portion of that, the Felix response
22 plan portion he couldn't get information himself. So
23 something is wrong here. When you ask the question
24 and when we have asked the question what is Felix
25 costing us, you always get the answer back from the
27
1 department. Well, we can't tell you because Felix is
2 mixed up with Special Ed. which is mixed up with
3 CSSS. It's a scenario where I think the legislature
4 needs to take another look.
5 Q. Thank you. Was this one of the areas,
6 Ms. Higa, where interim Superintendent Hamamoto
7 testified about when she came before this committee?
8 A. Yes, it's somewhat related. She did say
9 overall as we said earlier that when they were asked
10 for their expenditure numbers they give you budget
11 numbers which usually is a little higher than
12 expenditure numbers. But I think both her testimony
13 as well as the assistant superintendent for planning
14 and budget Laurel Johnston's testimony showed you
15 that there's an organizational problem in DOE as
16 well, you know. And business ordinarily if you have
17 a chief financial officer it's that person who knows
18 the inflow and the outflow of the money.
19 In DOE inflow and outflow are in
20 different parts of the DOE organization. The
21 budgeters are under Ms. Johnston's control; the
22 accountants who tell you how it's been spent are in
23 the other assistant superintendent's control. And to
24 exacerbate matters there isn't a routine recording of
25 the numbers from either side or a reconciliation of
28
1 those numbers nor is there a routine for you of those
2 numbers to the Board of Education.
3 I think you will recall that the board
4 chairman said they're not routinely told, they have
5 to ask for the information. If they don't get it,
6 they have to ask again or remind and basically it
7 becomes an IOU for as long as they don't get the
8 information.
9 Q. Ms. Higa, based on testimony given to
10 this committee by interim Superintendent Hamamoto and
11 Ms. Johnston, does it appear that the department will
12 be looking into these areas?
13 A. Yes, at least there was that concession
14 on their part or I wouldn't -- maybe concession is
15 too strong a word. There was that acknowledgment
16 that that is what they would want to work on.
17 Q. Now do you have any recommendation,
18 Ms. Higa, with regard to this term superpowers that
19 we've used much during these hearings?
20 A. Yes, and recognizing that this was a
21 power conferred by the federal court nevertheless
22 there needs to be some oversight exercised here, and
23 this comes about because what we see as an abuse of
24 those powers. I think the two contracts on the part
25 of the Department of Education service primary
29
1 examples here. In the first instance the PREL/Na
2 Laukoa contract what we had is a situation where the
3 original intent to contract directly with Na Laukoa
4 with general funds became another contract where Na
5 Laukoa was in effect sheltered through the PREL
6 contract.
7 The PREL contract was written so that Na
8 Laukoa was an integral part of it. Moreover, it was
9 converted from general funding to excess impact aid
10 funding which then took it out of legislative
11 scrutiny because under excess impact aid funding of
12 which the department had about $12 million this year,
13 the department has the authority to spend as it
14 wishes. And this is possibly a side issue at the
15 moment, but Act 234 which is what authorized the
16 department to spend this excess impact aid may be
17 something the legislature may want to look at again
18 because for three years running now the department
19 has had anywhere from $9 to $12 million of excess
20 impact aid.
21 The budget has showed about $24 million
22 of appropriation of impact aid. When the collection
23 comes in, $9 or $12 million more than that that
24 margin there becomes in effect the superintendent's
25 money to do with what he wishes.
30
1 Now the other contract, the Columbus
2 contract is another contract that illustrates what
3 happens when you don't have oversight. The Columbus
4 contract came about because in August, 2000 as part
5 of a court order the department was given two weeks
6 to retain a mainland recruiting firm for Special Ed.
7 teachers and counselors. The department tried as
8 they testified to get some names and come up with
9 anybody, turn to a member of the technical assistance
10 panel for suggestions was referred to Columbus
11 educational services.
12 The odd thing about this contract was the
13 state took all the risk. Apparently the state set
14 out its needs, Columbus came back with a contract and
15 said here, we'll look through this and although
16 apparently there was some negotiations, the state was
17 in very disadvantageous position as contracts go.
18 The significant thing is that this was
19 $100 million contract. When we looked at it at
20 $100 million, the teachers and counselors who would
21 have been hired would have been then paid about
22 two-thirds of it. One-third of it would have gone as
23 profit and overhead and for the efforts of the firm
24 to set up a mainland recruiting system. This is a
25 firm that had no track record in hiring Special Ed.
31
1 teachers. They had only been hiring mental health
2 professionals before they got this contract.
3 Neither contract, neither the PREL
4 contract nor the Columbus contract was signed by the
5 AG. Now, I think that's significant. So that
6 oversight is not officially part of the record of
7 these two contracts, and that might be something for
8 the committee to look at.
9 Q. All right. Now, this Columbus contract
10 for $100,000,000 that was over time amended down, was
11 it not?
12 A. Yes, it was amended down.
13 Q. And whatever the amount is that is paid
14 to Columbus with what your opinion is, then, is there
15 built into this contract or amounts that are paid
16 about a 30 percent profit margin; is that correct?
17 A. Yes.
18 Q. And it also appears that Columbus takes
19 no risks in this contract but only gains from it?
20 A. That's right because if it did not
21 provide the numbers of teachers that the department
22 needed, there was no penalty.
23 Q. Or if the teachers left early
24 prematurely.
25 A. There was no penalty.
32
1 Q. And in fairness to the department or
2 people involved they were not given much time to
3 negotiate this contract, were they?
4 A. That's right.
5 Q. And to compound that difficulty, not only
6 were they not given much time but it was made public
7 that they were not given much time so that whoever
8 was on the other side had a tremendous advantage over
9 the department during those negotiations; is that
10 correct?
11 A. Yes, that's right.
12 Q. Now, you did mention earlier one of your
13 recommendations had to do with organizational
14 structure.
15 A. Uh-huh.
16 Q. Have you spoken to that recommendation
17 completely?
18 A. Yes, and this is in the context of
19 needing better information within the Department of
20 Education primarily but, you know, it's not something
21 that DOH is exempt from either. Information in large
22 bureaucracies understandably perhaps takes a long
23 time to filter up and filter down. But particularly
24 in DOE it seemed a little strange to us very early on
25 you might recall there was a data request put to the
33
1 superintendent in which he told you that it would
2 take three months to get it to you because he had to
3 get it from the schools.
4 Now, of course subsequently you've heard
5 from someone else who had been at the schools who
6 said oh, no some of that information I can turn
7 around in two weeks. So here we're not sure what the
8 true story is. But it's apparent that when their own
9 internal auditor spends a good deal of his time in
10 trying to track expenditures just simply getting
11 information within his own department, then something
12 is wrong here. So something needs to be done about
13 either the organizational structure or the mechanics
14 of information gathering within the Department of
15 Education.
16 Q. All right. Now, are there any other
17 recommendations, Ms. Higa, that you would have to
18 this committee?
19 A. You know back in July when I was
20 testifying I think it was Senator Slom maybe who
21 asked me this question and it may still sound like
22 we're trying to build a kingdom here, but I think
23 there has to be continuous oversight over this issue.
24 One option might be to assign a specific Felix
25 auditing function to my office. In addition to which
34
1 you might want to look at the internal audit function
2 in DOE.
3 Currently the internal auditor reports to
4 the superintendent through the deputy superintendent.
5 That auditor reported to you that when he was asked
6 by the then deputy superintendent earlier this year
7 to look at the expenditures of the Felix response
8 plan that was the first time he had been asked to do
9 that. Earlier he had just been doing small school
10 audits.
11 Ordinarily in any business an internal
12 auditor reports to your governing entity and in this
13 case that's the Board of Education and that allows
14 for independence over the operating entity. So you
15 might want to consider discussing with DOE and DOH
16 the possibility of giving their internal auditor
17 greater independence by assigning that position to
18 the board rather than to the department.
19 Now, with an internal auditor, that
20 doesn't prevent of course external auditing but an
21 internal auditor will allow an entity to identify
22 weaknesses from within before the external auditors
23 get in, and it does tend to help organizations
24 improve themselves before they get criticized by
25 external auditors like us.
35
1 Q. And preferably this internal auditor if
2 that person were to exist and be independent you
3 would recommend that the internal auditor report to
4 the governing body rather than the direct employer?
5 A. That's right.
6 Q. Now, do you have any recommendation,
7 Ms. Higa, as far as ways to measure the effectiveness
8 of the services that have been or are being provided
9 to our children?
10 A. Yes. You know back last year when we had
11 our University of Pennsylvania consultants on board
12 they did remark that it was still not too late for
13 the legislature to look at hiring some expertise for
14 itself. And subsequently we have had a discussion
15 with the professor from Vanderbilt who did the
16 evaluation of the multisystem therapy program that
17 was put into place at Fort Bragg, North Carolina by a
18 member of the technical assistance panel who's
19 currently under indictment in North Carolina. And
20 one of the reasons for her indictment or one of the
21 charges has to do with the fact that the evaluation
22 that was built into the Fort Bragg project showed
23 that there was no perceptible difference in the
24 experiment even after the expenditure of $91 million.
25 Ms. Behar apparently then contracted her own
36
1 evaluation which showed a more favorable outcome for
2 that experiment. Dr. Bickman from Vanderbilt was the
3 one who did that initial evaluation that showed no
4 difference.
5 We did have a discussion with him
6 generally about MST and the concepts behind it and
7 the experiment and he did make a remark that, you
8 know, you have -- currently you have no way of really
9 knowing how effective the services are from an
10 independent point of view.
11 Compliance as the court has laid out is
12 one thing, but what you really want to know is are
13 these services working for the children, and I think
14 that's what this committee is all about, and I think
15 that's what the legislature is all about. My
16 perception is if you don't mind spending the money,
17 you want to be sure the money is delivering services
18 that are working for the children. If they're not,
19 let's either stop spending that money or spend it
20 elsewhere but you need somebody to tell you this.
21 Q. This someone would be some type of
22 independent expert in the area?
23 A. Yes, and of course someone independent of
24 the court and plaintiff attorneys if I might say so.
25 Q. And an expert of national caliber of
37
1 course?
2 A. Preferably, yes.
3 Q. All right. Now, based on the documents
4 that your office has received and analyzed, have you
5 been able to determine the annual amount expended on
6 the Felix consent decree?
7 A. Well, it's been reported I believe last
8 year it was reported at about $328 million for DOE
9 and DOH but we believe in looking at what might have
10 comprised that number I believe this is an
11 underreporting. There are other elements that
12 probably total somewhere's about maybe $60 to
13 $70 million more.
14 Q. What areas do these amounts come from?
15 A. Well, you have to charge the fringe
16 benefits for all those who work in this system. It's
17 probably about $30 million. There's student
18 transportation for Special Ed. which is about ten
19 million. There's school health services and the Zero
20 to Three component which we believe is not part of
21 the $328 million in which case then that's about
22 another $16 million.
23 There are AG's costs, all the attorneys'
24 costs which we don't know at the moment because we
25 have not yet gotten that data.
38
1 Q. By the way, the AG costs might they also
2 include what we've been referring to as the
3 plaintiffs' attorneys' fees?
4 A. Yes, we're not sure exactly where those
5 are being paid from. The records are still not
6 available to us.
7 Q. You've had difficulty obtaining those
8 records, have you not?
9 A. Yes.
10 Q. In other words, the records that would
11 reflect how much has been spent on attorneys' fees by
12 whom, to whom, those figures have not been provided
13 although they have been requested?
14 A. That's right.
15 Q. Now, in the fiscal year 1994 to 1995,
16 Ms. Higa, the reported annual cost of the decree was
17 about $180 million?
18 A. Yes, that's right.
19 Q. Do you know why that amount has doubled
20 and almost tripled in this five years' time?
21 A. Well, admittedly you've had an increase
22 in the number of children that are identified as
23 Felix children, and I think the legislature doesn't
24 have a real quarrel with that unless of course
25 they're misidentified as I said earlier. But if you
39
1 accept that most of them by and large belong in the
2 class, then you look at the other causes and whether
3 there's any ways and I think we have found that
4 there's ways. They're certainly profiteering.
5 There's certainly this perception that it
6 doesn't matter if services are poor at least they're
7 there. There is a culture that says that if you can
8 take advantage of the state, it's okay because nobody
9 is going to watch you any way. The ordinary controls
10 are not there.
11 There is a perception that it's okay that
12 you once worked for the state and you turn right
13 around and create a separate private business entity
14 despite ethics laws to the contrary. All of this
15 occurs and has been occurring, and I think these are
16 contributing to the rise in cost, and I think this is
17 the area where this committee is interested in.
18 Q. Did you find also, Ms. Higa, that there
19 were programs in place or have been in place that
20 essentially resulted in our children being
21 experimented on?
22 A. Yes, and the committee spent a lot of
23 time on MST. This was the multisystemic therapy
24 program. It started out as you might recall being
25 brought to your attention I believe in the 2000
40
1 session in the form of an emergency budget request.
2 You were asked to fund something because quote "the
3 court ordered it." Well, yes, it was in the
4 stipulations of the court, but it was a program that
5 was already underway, you know. It was a program
6 underway as I said earlier headed by the husband of
7 the division chief.
8 It was an experimental program because it
9 was not designed for the population that it applied
10 to. You started out, I think, and I was in one of
11 those hearings personally I tell you this. It was
12 not clear to me that this was a two-part program. It
13 started out what became called the home-based
14 portion. It was already underway, you were told to
15 fund it, you funded it.
16 The department came back and said well,
17 no, we're expanding it. Now this is where the second
18 part came in and this was the MST continuum. The
19 first part was by contracted providers; the second
20 part was to be provided by in-house staff who are
21 then hired for the program.
22 The second part was much more
23 experimental than the first. The only other
24 jurisdiction that implemented this second part was
25 Philadelphia and it took two years to set it up
41
1 before they even put the first family into the
2 program. Ours was set up within a handful of months.
3 It was supposed to have 200 subjects in the
4 experiment. From the very beginning the project ran
5 into problems getting people to participate. There's
6 supposed to be a random sampling -- I'm sorry, random
7 selection. Some people were to go into the
8 experimental part; some people are to go into the
9 control part which was called usually services. They
10 never got the numbers they needed. They never got
11 the 200. I believe they only got 23 pairs.
12 Abruptly this summer just months after it
13 started despite a two-year promise to the employees
14 and more importantly perhaps to the participants two
15 years promise that they would be part of this
16 experiment the project was abruptly canceled. It was
17 canceled in August or July and the families and the
18 therapists and the workers were told you have two
19 days to transition these people back to usual
20 services. Turn in your cell phones, turn in your
21 records, make no further contact with the clients. I
22 think this was very egregious. There are questions
23 about why this program was implemented in the first
24 place.
25 Q. In other words, the experimental program?
42
1 A. It's an experimental program. It was a
2 program that was evaluated, yes. But if you look at
3 who did the evaluation, the evaluation was done
4 primarily by the developer. Any jurisdiction that
5 uses the program must pay a franchise fee. If you
6 take on the program, you must also then hire the
7 developer as your trainer, and that has happened or
8 the trainers' organization and that has happened
9 here. The trainers that have come have come from
10 that organization.
11 And, in fact, we do have -- recently
12 acquired some information about co-authorship of the
13 then Ms. Hee director and the developer of this
14 program dating back several years before the program
15 was proposed for implementation here.
16 Q. Based on what I recall, the testimony of
17 witnesses in this hearing, Ms. Higa, this MST
18 continuum that essentially failed cost the state in
19 the order of millions of dollars. Am I correct?
20 A. Several million. I think it was maybe
21 two million or so.
22 Q. All right. Are there any other
23 recommendations, Ms. Higa, that you have?
24 A. I don't think so. I think eventually as
25 we work on the draft I didn't mention this earlier
43
1 but one of our other responsibilities to the
2 committee is prepare the committee's draft which we
3 will give to the committee. The committee will of
4 course give us its feedback on revisions that they
5 would like to be made before this draft goes out for
6 circulation per the rules fo the committee as well as
7 the statutes.
8 Q.
9 SPECIAL COUNSEL KAWASHIMA: All right.
10 Thank you very much. I have no further questions,
11 Madam Chair.
12 CO-CHAIR SENATOR HANABUSA: We will be
13 recessing, Members, and we will reconvene with the
14 members' questioning. Five-minute recess.
15 (Recess from 10:03 a.m. to 10:24 a.m.)
16 CO-CHAIR REPRESENTATIVE SAIKI: Members,
17 we'd like to reconvene our hearing. We'll commence
18 with questioning by members beginning with
19 Representative Ito followed by Senator Buen.
20 REPRESENTATIVE ITO: Thank you very much,
21 Co-Chair Saiki.
22 CO-CHAIR SENATOR HANABUSA:
23 Representative Ito, before you begin, my Co-Chair
24 forgot to say that the Co-Chairs are not instituting
25 a time limit. So you can speak for as long
44
1 as you wish.
2 REPRESENTATIVE ITO: Thank very much,
3 Co-Chair Hanabusa.
4 EXAMINATION
5 BY REPRESENTATIVE ITO:
6 Q. Good morning.
7 A. Good morning, Representative Ito.
8 Q. Thank you very much for all your hard
9 work.
10 A. You're welcome.
11 Q. And your staff.
12 A. It's my staff's work.
13 Q. It was really a pleasure working with you
14 and the members of your staff so...
15 A. It's been our pleasure too.
16 Q. All right. You know, just looking at,
17 you know, your recommendations and, you know, when
18 you mentioned about the Attorney General and, you
19 know, not reporting the cost of his services, what is
20 the reason for that?
21 A. I don't know. There's been no
22 explanation given to us.
23 Q. And the Attorney General, that's the,
24 what, the school assigned to the DOE?
25 A. Yes, these are the Deputy Attorney
45
1 Generals we're talking about.
2 Q. Deputy?
3 A. Yes. You might recall that this data
4 request was made very early in the session and some
5 of it was turned over but not all of them.
6 Q. You mentioned about contracts, you know,
7 like the Columbus contract and you said that there
8 was not much time to look at the contract and, you
9 know, study it before they signed the papers. You
10 know why because of that time thing what was the
11 reason?
12 A. Well, it's a little peculiar but the
13 requirement was in the stipulation and gave the
14 department only that limited time to find someone.
15 So it's true the department was given only two weeks
16 to retain and another two weeks to actually execute
17 the contract.
18 Q. So that was what by the federal monitor?
19 A. Yes, it was in the court stipulation. So
20 how they arrived at that stipulation, we don't know.
21 Q. So the DOE just signed the thing and you
22 mean the monitor -- the federal people told the DOE
23 to sign the papers and they just signed the papers?
24 A. In fact, the federal people told the DOE
25 to go get someone in this short of time and DOE did.
46
1 And according to the current superintendent as well
2 as a prior assistant superintendent who was the one
3 who actually negotiated the contract, they felt that
4 they had to have something in place at all costs
5 virtually; so the threat that the court was holding
6 over them was the threat of receivership, the threat
7 of sanctions and so they felt they had to comply.
8 Q. So what about the superpowers that they
9 gave the superintendent, did that play a role?
10 A. Well, the superpowers played into this
11 because then that exempted the department from all
12 the procurement law requirements. Ordinarily for a
13 contract you'd have to go out to a proposal or bid,
14 you'd have to solicit from a number of people before
15 you arrive at the best one for you and this can take
16 admittedly months especially for something this
17 large.
18 Q. You know, we have over here last year we
19 passed a bill or we passed a law that gave the DOE
20 more monies, federal funds, impact aid, intellectual
21 property, rights all the monies came back to the DOE,
22 all trust funds dealing with education went in the
23 DOE.
24 A. Yes, that's right.
25 Q. And according to your testimony, you
47
1 mentioned that this is the superintendent's, what,
2 slash fund?
3 A. That's not the word I used.
4 Q. Well, petty cash fund or whatever.
5 A. I didn't use that word either.
6 Q. Well, what?
7 A. Well, what this results in is a pot of
8 money without legislative oversight. He doesn't have
9 to get your permission to spend it. It's not clear
10 how much reporting he has to give you on how he spent
11 it or any superintendent, how any superintendent
12 spends that pot of money.
13 Q. And what about Board of Education, what
14 was their role as far as oversight?
15 A. You had testimony, I believe, from the
16 current board chair that the board was not aware of
17 all the decisions being made with these monies. In
18 fact, I think it was in one of the hearings where
19 Co-Chair Hanabusa was recounting the Columbus
20 contract whereby the contract was signed in late
21 August, 2000. It was a $100 million contract.
22 There was an amendment to that contract
23 in late January which brought it down to $40 million
24 because of the difficulty Columbus was already having
25 in finding the number of teachers that the department
48
1 needed and that they had contracted for.
2 Nevertheless, the board was here lobbying
3 you $400 million. It did not know that there had
4 already been an amendment to the contract. I think
5 that's an example of how the board was not kept
6 informed of developments.
7 Q. You know, last year we had a study, I
8 mean, you had an audit and a study that dealt with
9 the EO, educational officers?
10 A. That's right, yes, we did.
11 Q. You had budget and personnel?
12 A. Yes.
13 Q. You know, can you explain or elaborate
14 that study --
15 A. Yes.
16 Q. -- real briefly.
17 A. We were asked to look at the issue of
18 staff in the DOE who might have come up through the
19 teacher/principal track who may not have had the
20 technical qualifications to fill technical jobs and
21 whether, in fact, this system was giving DOE the most
22 qualified people to perform technical tasks
23 especially when you looked at the salaries these
24 people were being paid vis- -vis comparable salaries
25 in the civil service or the rest of state government
49
1 for instance; so we did look at civil service
2 positions, for instance, accountants, positions at
3 the university and see if, in fact, this theory was
4 worn out and in fact it was.
5 You had ex-teachers who had become
6 principals who then became budget officers for
7 instance or fiscal clones who had had no accounting
8 background for instance; whereas, someone performing
9 similar functions in UH or the rest of state
10 government I think paid -- I forget what it was a
11 third less or so who had actually been technically
12 qualified for those positions. What it became was a
13 track for -- a promotional track for educational
14 officers.
15 Q. So this was one of the things that you
16 brought up as far as reorganization?
17 A. Yes. When I raise the issue of
18 reorganization here for Felix, it was with the idea
19 that perhaps if you looked at combining the functions
20 of budget preparation and execution and accounting
21 for expenditures organizationally in some way then
22 maybe the corollary to that ought to be that you have
23 qualified people who are technically qualified for
24 those positions not necessarily people who came
25 through the educational track but that was not an
50
1 issue that came up before this committee.
2 Q. And even like personnel, looking for
3 Special Ed. teachers do you feel we had an effective
4 personnel department we don't have to have, you know,
5 we don't need the Columbus contract?
6 A. I believe there are some records that
7 already indicated fairly soon after the Columbus
8 contract was signed that other entities should be
9 explored. I think the department already has other
10 contracts. So one in particular is EPS. I think it
11 means educational placement services if I do recall,
12 and there were comments on their own records that
13 said go look at other places.
14 Q. You mean it's an out source, a private?
15 A. Well, the Columbus contract is a lease
16 arrangement so that the people who are hired by
17 Columbus are Columbus employees but work in our
18 schools. The EPS contract is more of a head hunter
19 type where we would pay the company for finding us
20 people but those people then become DOE employees.
21 So it's a different arrangement.
22 Q. So your recommendation is?
23 A. We didn't have a specific recommendation
24 as to which type of contract might work. I think our
25 larger recommendation was this entire business of
51
1 superpowers and lack of oversight over these kinds of
2 authorities that are given albeit the fact that this
3 is conferred by the federal court.
4 REPRESENTATIVE ITO: Okay. Thank you
5 very much.
6 CO-CHAIR REPRESENTATIVE SAIKI: Thank
7 you. Senator Buen followed by Representative
8 Kawakami.
9 EXAMINATION
10 BY SENATOR BUEN:
11 Q. Thank you for all the work that you and
12 your staff have done. I'm interested in the surplus
13 money. I believe there were about, what, $12 to
14 $13 million of surplus money remaining and the
15 legislature was criticized time and time again by the
16 Department of Education specifically the -- by the
17 former superintendent that we did not give the monies
18 that they were requesting for to be compliant, and I
19 believe there was a lot of surplus money there and
20 can you tell us or give us a recommendation to the
21 legislature in what can we do to fix that kind of
22 problem so that this won't happen again?
23 A. I believe you're referring to --
24 actually, it was more than $12 or $13 million. It
25 was $17 million. This was a figure given to us by
52
1 BNF when we asked and this was only in EDN 150. So
2 this was money that was left over. It was surplus
3 money at the end of the last fiscal year.
4 Half of that $17 million had to be
5 lapsed. The other half the department was allowed to
6 keep and this is under the law that allows the
7 department to keep 5 percent in EDN 100 and 5 percent
8 in EDN 150. In addition to this $17 million, there
9 was $13 million in encumbrances in EDN 150 at the end
10 of the last fiscal year.
11 I think the point that was raised in a
12 hearing was if you combine the two because it's not
13 clear how much of those encumbrances actually will be
14 spent. If you looked at the $30 million altogether
15 there, this exceeds the $27 million you eventually
16 appropriated as emergency for Felix last session.
17 That's where those numbers come from.
18 As our recommendation goes and I should
19 also say that during the session you were asked to
20 fund in effect the PREL contract, what became the
21 PREL contract. You funded it as general fund money.
22 When it was executed, it was funded by impact aid,
23 the switch was made to impact aid for the excess
24 portion of impact aid money thereby taking it out of
25 legislation scrutiny. Had it remained as a general
53
1 fund contract, then it would have come back to you as
2 an item you could scrutinize.
3 So this raises the issue of whether you
4 want to tighten the boundaries over excess impact
5 aid. It also raises the issue of what kind of
6 information you're going to demand out of the
7 departments. And as the interim superintendent did
8 discuss with you, she does acknowledge that they have
9 been giving you budgeted numbers rather than expended
10 numbers.
11 So there is a combination between the
12 two. I think these are a number of issues you might
13 want to consider either amendments to the statute or
14 amendments to your practices in your money
15 committees.
16 Q. Thank you, thank you. The other question
17 that I have is in regards to the laptop computers. I
18 remember the internal auditor Mr. Koyama spoke about
19 that and it was about -- well, close to $300,000 that
20 was expended for laptops issued to vacant positions
21 and that's quite a lot of money to vacant positions;
22 so you know, I'm looking at how can we fix this kind
23 of problem that from the legislature's, you know,
24 from our side, you know, when we -- we wouldn't have
25 known about this unless we had questioned the
54
1 internal auditor and through this investigative
2 committee. We would never probably would have known
3 this and so is this the kind of organizational
4 changes that you were referring to that maybe we
5 could look into?
6 A. This might tie to the recommendation
7 about somehow breaking up EDN 150 information. You
8 might recall that Mr. Koyama's audit covered just the
9 Felix response plan items.
10 Q. Right.
11 A. Now remember when the departments come to
12 you for other their budget requests be they regular
13 budgets or emergency budgets at least in recent years
14 my recollection is they tended to come to you in
15 terms of Felix response plan items, and you'll fund
16 whatever they ask for very often. But you never get
17 information back in the same format. Maybe that's
18 what you need to do.
19 If this is the way that you gave them the
20 money, ask them for the information back on how they
21 spent it by the same format. They ask for it as
22 computers to principals, computers to teachers, et
23 cetera, ask how many they bought. Incidentally on
24 that item, there is subsequent testimony from the
25 department that as of the date of that audit there
55
1 was -- I forget how many unfilled positions
2 subsequently some positions had been filled, but we
3 have not received the updated information you should
4 know.
5 I think Mr. Koyama or someone else
6 subsequently maybe it was Mr. Ito discussed what they
7 were doing in terms of a correction plan on those
8 findings. So it's still not all that clear what
9 happened to those hundred some odd laptops that are
10 somewhere out there.
11 Q. Yes, I didn't feel that we got the
12 answers to where they went to whether they were put
13 into a room or were given out assistants or, you
14 know, it wasn't clear to me.
15 A. I thought the answer was rather vague as
16 to what happened to those laptops.
17 SENATOR BUEN: Thank you. Thank you,
18 Ms. Higa.
19 CO-CHAIR REPRESENTATIVE SAIKI: Thank
20 you. Representative Kawakami followed by Senator
21 Slom.
22 REPRESENTATIVE KAWAKAMI: Thank you,
23 Co-Chair Saiki.
24 EXAMINATION
25 BY REPRESENTATIVE KAWAKAMI:
56
1 Q. I want to thank you very much --
2 A. You're welcome.
3 Q. -- auditor, for such a splendid job that
4 you've done. Over the years we've just been trying
5 and trying very difficult to get information, and the
6 fragmentation of the DOE was mentioned by everybody
7 and they know it's difficult to get information from
8 one section to the other, et cetera, et cetera. We
9 felt very sorry for Mr. Koyama, one guy doing all
10 that work.
11 A. Yes.
12 Q. And we did promise that if he comes back
13 with information that we would try to get him some
14 more positions and try to shore up that area.
15 I wanted to ask you, Ms. Higa, about the
16 Fort Bragg project.
17 A. Yes.
18 Q. Now, that was only for military children,
19 am I correct?
20 A. Yes, that's right. Fort Bragg, North
21 Carolina.
22 Q. Now, somewhere along the line something
23 happened to a student. Do you know any information?
24 A. That I'm not familiar with, no, no.
25 Q. I was hearing something about a student
57
1 dying or something had occurred, a suicide,
2 et cetera.
3 A. Oh, that was in relation to here.
4 Q. Oh, here.
5 A. It was the MST experience here.
6 Q. I see.
7 A. Not in Fort Bragg.
8 Q. Not in Fort Bragg?
9 A. Yes.
10 Q. Somehow we got tied to it and I thought
11 that was the reason it got cut off.
12 A. No, the problem in Fort Bragg was a
13 different problem.
14 Q. Okay.
15 A. There the evaluation showed no difference
16 for having spent all this money; so the federal
17 government called a halt to it but the specific
18 charges against Lenore Behar have to do with the use
19 of the federal money and whether that money was used
20 appropriately.
21 Q. I want to take you, you talked about
22 greater independence as far as having an internal
23 auditor and perhaps if we get a position that would
24 be housed with you to the DOE, et cetera, so that we
25 could get that kind of information at our fingertips?
58
1 A. No, no, it's two different things. The
2 interim auditor ought to remain with the executive
3 branch. So it would preferably be an internal
4 auditor to the Board of Education.
5 Q. Oh, okay.
6 A. The Felix auditing function I was talking
7 about was somewhat akin to the procurement auditing
8 function that's been assigned to my office. This was
9 part of the amendment to the procurement law that
10 occurred somewhere around '93 or '94. And what it
11 does is it in effect tells me that I have to give
12 more priority to that function than I would
13 ordinarily.
14 I mean, when I look at how I deploy my
15 staff, how I look at what you've asked me to do
16 versus areas that I think we ought to look at. If
17 there is a specific expression that you want to be
18 sure that we audit Felix expenditures or audit the
19 Felix program and if there is that expression, then I
20 have to make sure that that gets done, and it doesn't
21 become a competitor with a lot of other needs for
22 audit in the state.
23 Q. So that's the request for a position?
24 A. It doesn't have to be a position. It can
25 just be an expression that you want that performed.
59
1 Q. That we would let you know and you would
2 zero in on that particular portion?
3 A. Right, my current statute and
4 constitutional charge does not prevent me from doing
5 so but if you wanted to express a preference you can
6 do so.
7 Q. The other thing I wanted to follow up.
8 Now, under EDN 150 you also have CSSS --
9 A. Yes.
10 Q. -- tied into that?
11 A. Yes.
12 Q. So are those funds commingled?
13 A. Well, in there expending, there are
14 program ID's that's at a lower level than you see in
15 the budget, and there are some specifically
16 designated for CSSS. If you asked for that
17 information, you could get it. But if you don't ask,
18 you don't get it.
19 Q. Okay. And your office is doing the audit
20 on CSSS?
21 A. That's under a different request from the
22 legislature, yes.
23 Q. Okay. So that will be coming to us?
24 A. This coming session 2002.
25 Q. Okay. And the reason why I wanted to tie
60
1 in the best practices idea that is being utilized
2 there with Felix, can we really say that we use the
3 best practices with Felix? It sure doesn't seem like
4 it.
5 A. It doesn't seem like it, but I can tell
6 you for sure because that was not part of this
7 committee's work that we did for you. That would be
8 probably more appropriate at an audit level.
9 Q. Okay. The other thing would be -- oh,
10 you know, I often wondered why and maybe you know in
11 your findings you found that out the Mokihana project
12 on Kauai.
13 A. Yes.
14 Q. We did get monies from the legislature
15 after Iniki and we put that project in to being
16 because we could see the kinds of things that were
17 happening to students who were living in tents or
18 living on the beach or soup kitchens, et cetera, et
19 cetera. It had taken a toll on the mental capacities
20 of children as we saw them in the classroom, and I
21 wondered why the Department of Health had never taken
22 us up on it.
23 It was offered many, many times and it
24 seemed like we were reinventing the wheel all the
25 time instead of looking at practices that were being
61
1 done that were successful. Do you have any comments
2 on that?
3 A. I'm not sure why DOH did not take you up
4 on that. We did look briefly at Mokihana in I think
5 our '98 audit of Felix. We had found then as I
6 recall that it seemed to be working fairly well as a
7 model. And for the rest of the committee that was a
8 model where DOE had control over the money, and
9 actually in many ways what is now happening with
10 Felix with the school-based services being in DOE's
11 hands in the lower-end children being the DOE's
12 direct jurisdiction it's more akin to the Mokihana
13 model as Mokihana was first designed. And that was
14 one where the money was in DOE's hands to purchase
15 the services for the children and more of the
16 services were delivered at the school than was the
17 case in the clinically based model that was then
18 implemented for the rest of the state.
19 So there again there may have been that
20 basic difference of opinion within the Department of
21 Health to go the clinical route. I don't know why
22 that never happened.
23 Q. I just thought maybe in your findings you
24 might have seen something that related to that
25 particular project.
62
1 A. Not that specifically, no. I can't
2 answer that question.
3 Q. I think that's about it, but thank you
4 very much.
5 A. You're welcome.
6 REPRESENTATIVE KAWAKAMI: Thank you,
7 Chair.
8 CO-CHAIR REPRESENTATIVE SAIKI: Thank
9 you. Senator Slom followed by Representative Leong.
10 SENATOR SLOM: Thank you, Co-Chair Saiki.
11 EXAMINATION
12 BY SENATOR SLOM:
13 Q. Good morning, Ms. Higa.
14 A. Good morning.
15 Q. I want to add my appreciation also to you
16 and your fine staff. It's kind of like all in the
17 ohana. We've been here together for so long.
18 A. All 105 hours, yes.
19 Q. Just a couple of questions.
20 Mr. Kawashima, I think, had asked you back in July
21 when you first appeared, but just for the record
22 again to refresh everybody's memory you have been the
23 state auditor for how long now?
24 A. The exact date is December 31, 1991.
25 Q. Okay. And prior to that?
63
1 A. Prior to that I was with the office since
2 January, 1971, and I started as an assistant analyst
3 and worked my way up.
4 Q. And your educational background however
5 was in another field?
6 A. Yes, I have a bachelor's degree in
7 education as well as a master's degree in education.
8 Q. Thank you. I think that's important
9 because some people have said why are the bean
10 counters, why are the auditors, why are these people
11 looking at this and it is people such as yourself
12 that you have experience and a special interest in
13 education that have been doing this.
14 You mentioned that you had received along
15 the way unsolicited calls, calls that you followed up
16 on so forth.
17 A. That's right.
18 Q. You mentioned over 40 different people.
19 Are you still receiving calls?
20 A. Yes, as a matter of fact we are, we are.
21 In fact, we continue to get E-mails and letters,
22 anonymous letters sometimes. We still get calls,
23 yes.
24 Q. Are the calls generated because of what
25 the committee has done and what people have seen
64
1 since June?
2 A. I think that's a large part of it. It's
3 surprising the number of people who are watching
4 these proceedings on Olelo. I think there is a good
5 deal of discussion in the community about the issues
6 coming before the committee. As I understand it,
7 there's been a good deal of communication with
8 members from constituents. So people are spurred to
9 come forth. It's almost like the more they hear
10 about it, the more they want to come forth.
11 Q. Now you did mention, however, that there
12 was a common threat, a reluctance or a fear of
13 intimidation or retribution.
14 A. Oh, yes.
15 Q. Is that real or is that people just being
16 paranoid?
17 A. There may be some truth to what's
18 happened. We're not sure whether people are let go
19 for retaliatory purposes. We're not sure if people
20 will hereafter be retaliated against. We had one
21 example and this was not even within state
22 government. There was one point when we were made
23 aware that progress notes -- and these are the notes,
24 the daily notes that different people who work with
25 children keep of the activities and what they did
65
1 with children.
2 Progress notes are supposed to be kept by
3 the people who have the contact. We were informed --
4 and I think this is a credible source -- that when we
5 were -- and this is during this investigation, we
6 were going to this agency to check on their progress
7 notes because we wanted to see, if, in fact, the
8 billings that had been sent to the state could be
9 supported by progress notes.
10 We came in possession of an internal memo
11 in that agency that threatened to the staff the
12 withholding of their paychecks if they did not come
13 up somehow with the progress notes that were missing.
14 And even if they weren't present that day, they were
15 to create progress notes. That makes you wonder
16 about the credibility of those progress notes if
17 that's the case but the retribution there was the
18 withholding of paychecks.
19 Now, this is a questionable practice and
20 one that makes you wonder, you know, well you can see
21 why people are afraid to come forth and they go to
22 extraordinary means to ask us to keep their
23 confidentiality.
24 Q. You mentioned previously and again today
25 you use the term culture of profit. You also
66
1 mentioned the term culture of honesty in terms of
2 tighter control. Would it be safe to say that there
3 are also perhaps a culture of fear among DOE and
4 other employees?
5 A. Yes, I believe there is. I believe there
6 is.
7 Q. And -- I'm sorry go ahead.
8 A. I'll give you a couple of examples.
9 Q. Sure.
10 A. You know, in the course of our work for
11 the committee, as I said, we had talked to a number
12 of witnesses and potential witnesses and in some
13 cases there's a great deal of interviewing of them to
14 make sure that they would be worth your time to put
15 before you and to see if they had good information
16 that would stand up. And it seemed to us in a couple
17 of instances at least that when they talked to us and
18 when they talked to you was a totally different
19 experience where it seemed as though by the time they
20 came before you, they were very afraid to tell you
21 what they had told us earlier. And so we were taken
22 aback sitting here, you know, hearing the testimony.
23 Gee, this is not what we thought this
24 person would be able to tell you; so we're not sure
25 somewhere along the way some message had been sent to
67
1 this person that to be careful about what they said
2 to you.
3 Q. You also mentioned, and we've had a
4 couple of other witnesses previously mentioned the
5 same thing they referred to the education community
6 and the health community in this state as a tight
7 community. Could you expand on that?
8 A. Yes. It may be partly because this is a
9 emerging field. It may be a field where we've had a
10 shortage of providers so there may have been an
11 influx of people or there may have been a very quick
12 ramp up of skills or a quick ramp up of credentials
13 not necessarily tied to skills and some of this may
14 have to do with possibly the operation of diploma
15 mills where one can purchase in effect a degree.
16 You can get a degree for -- a bachelor's
17 for $3,000, a master's for $3,500, and a Ph.D. for
18 $4,000. You can get a master's in maybe nine months.
19 You get credit for life experiences. It's maybe
20 distance learning primarily. It's not all that clear
21 what the course requirements are, what courses one
22 must take in order to attain a degree. Those are all
23 in operation here.
24 Q. Help me with some of the numbers on the
25 Columbus contract. The Columbus contract started out
68
1 at $100 million?
2 A. Yes.
3 Q. Was that revised to $40 million?
4 A. Yes.
5 Q. Ms. Hamamoto just signed an agreement an
6 extension that it's now at $63 million?
7 A. That's right.
8 Q. Okay. And the figures that were provided
9 indicated that there were a net new Special Ed.
10 teachers that were hired net about 207. Is that a
11 correct number?
12 A. Yes. I think by the end of the third
13 year I'm not sure if it's the third year or the
14 second year that's the number of teachers that ought
15 to be in place.
16 Q. Okay 207, $63 million. So my math says
17 that comes out to like $304,000 a teacher for
18 recruiting.
19 A. Yes, but remember it's a three-year
20 contract and some of those teachers who have been
21 here from the first year and some of them come in in
22 the second year; so you have to stratify the number.
23 Q. But there's no guarantee that they will
24 stay four years.
25 A. No.
69
1 Q. There is no penalty if they leave?
2 A. That's right.
3 Q. Okay. Nothing comes back to the state.
4 In other words, if the full terms of the contract, in
5 fact, are not honored?
6 A. That's right. And then as a matter of
7 fact, as part of the contract any equipment that's
8 purchased with our money never comes back to us.
9 Q. So it belongs to them?
10 A. That's right.
11 Q. We pay for it but it belongs to them?
12 A. That's right. That's like ordinary
13 provisions in state contracts.
14 Q. You said earlier that a number of your
15 efforts to obtain information were stymied by first
16 of all the federal court and the federal monitor's
17 office.
18 A. Yes.
19 Q. You also mentioned the Deputy Attorney
20 Generals.
21 A. Yes.
22 Q. What was the reaction from the former
23 superintendent of education of trying to get
24 information?
25 A. We did not try to get specific
70
1 information from him. My understanding of the
2 experience of his -- whether he testified before you
3 or not is one where at the time he stepped down there
4 had been no subpoena issued to him yet. I'm sorry.
5 There was a subpoena issued, but we had not scheduled
6 him.
7 The committee felt that under the
8 circumstances as I understand it the offer should be
9 made to him as to whether he would like to come and
10 testify but gave him a deadline for giving us a
11 response because we had to schedule the rest of the
12 hearings out, and there is a ten-day requirement, a
13 notice requirement that's part of the rules of the
14 committee.
15 He did not respond by the deadline and so
16 the committee proceeded to schedule the rest of its
17 hearings. It essentially was I guess the last two
18 hearings. That's my understanding.
19 Q. And finally I'll reserve some questions
20 for later. I don't know how to react to these new
21 superpowers I've been given more than five minutes.
22 But let me just ask you is it your opinion from
23 everything that you've seen, heard, been privy to at
24 all that there are any criminal actions that have
25 taken place or is it just a question of
71
1 mismanagement, waste, non-accountability and so
2 forth?
3 A. Particularly in the data analysis that
4 we've done with the providers, some of the data is
5 not explainable by any other way; and so yes, there
6 is a possibility that if in case there is some
7 criminal action here we would at one point be
8 obligated to turn the information over to the
9 Attorney General.
10 SENATOR SLOM: Thank you, Ms. Higa.
11 Thank you, Co-Chair.
12 CO-CHAIR REPRESENTATIVE SAIKI:
13 Representative Leong followed by Senator Sakamoto.
14 REPRESENTATIVE LEONG: Thank you and
15 thank you, Chair.
16 EXAMINATION
17 BY REPRESENTATIVE LEONG:
18 Q. Good morning, and I want to tell you how
19 proud I am to know you and --
20 A. Oh, stop.
21 Q. And you're wonderful. I know how much
22 integrity you have and integrity means so much to us
23 as we listen to all these people; so you've really
24 done a great job.
25 A. Thank you.
72
1 Q. And we're glad to have you on board. I
2 know that because integrity is so valuable to most of
3 us I had a question that had to do with the billing,
4 the improper billing from the Department of Health.
5 Do you know or what's going to happen to
6 these people because if anyone overcharges now in
7 HMSA or all of these things, it comes out in the
8 paper, you know, it's very viable for us to read.
9 What is going to happen to these people? Is there
10 something we can do, a recourse of action?
11 A. What I'm hoping for is at the conclusion
12 of this committee's work which will be primarily the
13 submission of the committee's report to the
14 legislature by the opening of the next session. If
15 there are sufficient indicators of any kind of
16 criminal action and we believe the analysis we've
17 done of the database does give us some comfort that
18 there are such signs personally I would like to see
19 this information pursued by the Attorney General
20 either in terms of refund to the state or something
21 more than that because if these are practices by
22 which the state is being billed, you have to stop.
23 Q. Well, I think that's a general feeling
24 because we all get calls. I've received so many
25 calls into my office of people who watch this
73
1 session, and they are very happy that this is ongoing
2 and many of them are teachers who are very concerned
3 about what is going on; and therefore, I think what
4 we're doing is very important because they believe in
5 the integrity of the system but I also said that, you
6 know, when you mentioned this morning that when the
7 superintendent came in and said it would take three
8 months to get that information, it sent up signals in
9 my head because I know having been in the DOE that it
10 wouldn't take three months to get that information.
11 It's all on file in each office that it could come
12 out; so that kind of signalled me that something was
13 not correct with what he said on that.
14 I guess I was concerned also with those
15 contracts where the Attorney General did not sign it,
16 and maybe he wasn't aware of it. But I get concerned
17 about those things that should have done and hadn't
18 been done and everybody covers up for everybody else
19 on it. But I guess one of the things is that I'd
20 like to see a process whereby something comes of
21 this, you know, whether it's litigation or turning on
22 your records so that we can get money back for the
23 state.
24 I think that when you've done something
25 wrong that there should be some sort of retribution
74
1 for it. I mean, I know that that's what I was saying
2 that I think that's what you're going to be looking
3 into.
4 A. Yes, I think there are so many things
5 that are going to come out of this committee's work.
6 Some of them will be legislative; some of them will
7 be simply within the respective departments. I think
8 it's been very encouraging. You might recall that
9 when this committee started remember the governor
10 said he hopes the committee will tread softly.
11 I think it's a very different message
12 now. The governor's message is go to it, and he
13 expects the executive branch to cooperate. And I
14 would take that to also mean to reveal wrongdoing if
15 that's what is going on.
16 So whether some of the actions are yours
17 to take or there are some of them are for the
18 executive branch to take, or there are some of them
19 are part of an audit function for us, I think it's a
20 multipronged approach that has to result in some of
21 these fixes because this cannot go on. Because you
22 see what you have to look at is already what is to
23 happen after the consent decree is over.
24 You still have to have a system in place
25 to make sure that the services that are delivered are
75
1 effective services to the children. They have to be
2 the right service but you sure don't want to pay more
3 than a dollar extra for those services. And as you
4 have found, partly because we had to rush to get the
5 system in place but also partly because people have
6 taken advantage of the state's position here.
7 There's been what I suspect a good deal
8 of cheating going on and that's what is driving this
9 cost up. So to the extent that you can cut that out
10 and bring the perpetrators before the right
11 tribunals, I think this committee's work would have
12 been worth it.
13 Q. And one of the things you mentioned and
14 brought up was accreditation of people.
15 A. Right.
16 Q. If they're not properly accredited and
17 they're out working these students, they are the ones
18 that are going to suffer because they don't have the
19 proper training for it, and I think that's something
20 that's brought to mind that we need to really follow
21 up on whether it's in legislative work or of that
22 nature.
23 Thank you, Ms. Higa. Thank you, Chair.
24 CO-CHAIR REPRESENTATIVE SAIKI: Thank
25 you. Senator Sakamoto.
76
1 SENATOR SAKAMOTO: Thank you, Chair.
2 EXAMINATION
3 BY SENATOR SAKAMOTO:
4 Q. Over the years you've done many audits,
5 and I know sometimes you get frustrated that your
6 recommendations are not followed not necessarily
7 disregarded but no real action is taken.
8 In this case there was an investigative
9 committee and validated much of what you suspected.
10 Do you feel the legislature should do more
11 investigative committee such as this to at least,
12 from what you find, to advance the ball further as
13 opposed to a bookshelf?
14 A. You know, it's a major investment on the
15 part of the legislature to do something like this.
16 As I understand it, this is the first joint
17 investigative committee ever. The two prior ones
18 were only senate investigative committees. The kind
19 of effort this took on your part 105 hours of sitting
20 here and listening to all those testifiers plus the
21 fact that fortunately I think in this case there was
22 already an appropriation to my office for legal
23 counsel. That's also expensive, but the question is
24 is it more expensive to let abuses continue.
25 Now, granted that you also had my office
77
1 at your disposal, I'm not so sure we can always do
2 that for you for every committee you'd like to
3 create. So those are real considerations. I think,
4 though, that the fact that this committee has
5 subpoena powers any investigative committee has
6 subpoena powers is a tremendously powerful authority
7 that you don't have when people come before you
8 during sessions.
9 Q. I know one of the issues that has been
10 problematic when you do your audits is access to
11 information and many times the veil or the guise of
12 confidentiality privacy of having to go through the
13 records and black out names has been thrown up.
14 How can we improve the situation so
15 efforts don't have to get to the point of this effort
16 with subpoenas and legal counsel and all of that so
17 that we as a state can help our individual people who
18 need help and have records at least be accessible for
19 specific cases such as your office. What should we
20 do?
21 A. I'm not sure that this takes legislation
22 because right now it seems to be an interpretation of
23 existing legislation which may mean that we may be in
24 court on that issue, and this has to do with my
25 office's access to those records.
78
1 Q. Well, I guess it's even us if I go to a
2 school and I say I understand their problems with
3 ISPED, can I see the problems, they aren't able to
4 say Sakamoto come into my office, I'll put out a
5 record and show you what the problem is. They say
6 oh, well, you guys are not authorized to look at
7 these records.
8 So even if our zeal to help we get
9 frustrated even on the simplest thing of show me the
10 problem and I'm sure it's not only us. It's one
11 teacher to the other sometimes because the student
12 isn't under this particular teacher they can't
13 necessarily share to the extent that would actually
14 help the student. How can we get beyond those as
15 well?
16 A. I'm not familiar with how that might be
17 solved. I've only been looking at the problem from
18 our point of view and the statute that's been
19 presented before us. This is the federal family
20 educational rights and privacy act FERPA. I don't
21 know if this is a generic problem nationwide.
22 I've had some limited conversations with
23 other audit offices, and I intend to ask more of
24 them. But I know that at least one state that has no
25 problem they are given unfettered access to student
79
1 records in similar situations like ours and there is
2 no redaction, no requirement for parental
3 notification, et cetera, because they are considered
4 to come under the audit requirements of both FERPA
5 and the authorizing legislation.
6 Q. Please inform us what efforts can be done
7 and for your specific audit purpose as well for a
8 broader purpose even tracking a student from the
9 twelfth grade to junior college the two systems
10 currently don't talk to each other?
11 A. That's true.
12 Q. So the UH system uses this number and the
13 DOE uses that number; so we're saying how well are we
14 doing educationally and it's like our best guess is.
15 But changing the subject.
16 A. All right.
17 Q. If we take -- I need a picture. So let's
18 say we have a dam, we have water resources on one
19 side, money, time, hours, and the DOE is one big part
20 of the dam, the Department of Health is another part
21 of the dam keeping the resources from escaping and
22 we've discovered in the past weeks leakage in the
23 system. Some between the DOE and the DOH water
24 leaking through those cracks; some finding cracks in
25 either of those blocks that are holding the
80
1 resources, cracks in what the DOE is doing, cracks in
2 what the DOH is doing; but then as you say suspected
3 cheating maybe some of those were purposely drilled
4 so leakage comes through purposely and a lot of I
5 think the perception, a lot of undermining where the
6 water is just going around especially under the
7 blocks; so not that people in the respective
8 positions aren't doing what they feel they need to do
9 but a lot of leakage. And actually on the sides of
10 those blocks on one side is the Department of Human
11 Service block; on the other side is the judiciary
12 block and within each block each respective
13 bureaucrat, each respective administrator, all the
14 way down to the clerk everybody saying we're doing
15 our job. But as we look at the people, the children,
16 the families, many times they're jostled between
17 agencies. Foster children get transitioned a dozen
18 times and then we ask why does it cost so much? Why
19 do they need therapeutic foster care? Why do they
20 need out of state placement.
21 How can we, in your years of looking at
22 issues and especially with Felix, do we need a single
23 source of entry? Is there a better way especially
24 those four agencies to communicate and deal with
25 multiagency issues?
81
1 A. Gosh, that's a good question. Hopefully
2 you have a governor that's going to take a more
3 active role here. Admittedly we have some confusion
4 in our government structure because of the elected
5 Board of Education. Nevertheless, this is all still
6 part of the executive branch. And hopefully with
7 some of the committee's revelations here that both
8 the legislature and the governor looking at the
9 causes of some of these problems and setting a tone,
10 a different tone perhaps and holding the highest
11 people accountable for changing that tone will begin
12 to filter down to the people at the bottom.
13 You're never going to be able to correct
14 everything all at one time. You probably will never
15 be able to get to all the problems at the very bottom
16 but at least you have to start sending the message
17 from on top that the culture has to change, that yes
18 we're under the consent decree, yes, we're near the
19 end of the consent decree and yes, maybe we have to
20 make certain concessions and bend the rules but
21 that's no longer going to be the case.
22 And those who have profited from the
23 bending of the rules had better be on the mend as far
24 as their practices go because some of these rules are
25 going to be enforced now. The legislature may want
82
1 to put in other controls that may be relaxed at one
2 time but you may have to pull back.
3 Q. So on top of those agencies there is the
4 governor and his cabinet and administrator including
5 Attorney General because of those bottom blocks there
6 is the legislature and your office. On top of those
7 bottom blocks there is Board of Ed., and actually
8 standing on top of those two rows of blocks are the
9 teachers who are watching now, the people who are
10 sitting here running up and down the block. Some of
11 them as you said have called out to you or called out
12 to us saying watch out for this or how do you help
13 this?
14 Now that monitoring is done by the
15 monitoring project and hopefully that will end
16 soon -- we know it will end to hopefully sooner than
17 later -- formulas have been set up to do things a
18 certain way. Do we need an independent monitoring
19 agency separate from the DOE to help oversee our
20 continual efforts as we go forward?
21 A. You need some kind of independent
22 oversight whether it's a separate entity or whether
23 it's assigned to me or something else. See, you
24 probably cannot have it in either one of those
25 departments. It doesn't make sense. It has to be
83
1 external to the departments; and if you looked at
2 three branches of government, that's what you did or
3 the constitutional drafters did when they created our
4 office, but that's the essence of an auditing
5 function that it's separate from those who are doing
6 the execution. So as I said earlier, you might want
7 to specifically assign it to me. If you want to
8 create a separate entity, that would be your option
9 as well.
10 Q. Is that something you want?
11 A. Someone asked me that question earlier.
12 Q. I'm sorry.
13 A. Earlier in July I thought it's more work.
14 Q. I think state charter schools is
15 something you would task to do a formal for funding
16 but that has been very problematic; so I guess I'm
17 not saying I guess this would be problematic as well.
18 A. No, but charter school problems is an
19 entirely separate problem because that is an
20 executive function you have assigned to me. What
21 you're talking about here is basically still an audit
22 function and that more properly belongs to the
23 legislative branch.
24 Q. Okay. Well, maybe in my last sort of
25 topic is outcomes. We've talked a lot about leakage,
84
1 we talked about well maybe purposeful leakage where
2 the wedges were pushed in cracks to keep the crack
3 open or to let more water or resources flow out, and
4 I guess you've mentioned earlier in response to I
5 believe to Senator Slom or was it Representative
6 Kawakami's or was it representative best practices
7 we're not necessarily part of this audit.
8 From your perception, in the years you've
9 overseen what we've done as a system and in
10 particular education since that's your background now
11 as we get to this specific issue, as we look for
12 outcomes that we can measure and monitor, how big a
13 revolution or evolution or just a little motor, how
14 big a change do we need assuming we change the tone
15 as you suggested, how big a change do we need so we
16 can have measurable outcomes as opposed to how many
17 dollars, how many peanuts, how many yellow beads, how
18 many brown beads, how can we have for private
19 schools, how big a change do we need so we can say
20 these are good peanuts as opposed to well, I just see
21 there's ten peanuts?
22 A. Well, there is that current effort or
23 parallel effort going on now on accountability and
24 standards there. The department has, I think,
25 contents standards for four major areas. That hasn't
85
1 gotten agreement yet on the performance standards for
2 those areas yet. I don't know where they are, those
3 performance standards.
4 I guess it's a legislature's decision as
5 well as board's decision how much of that will be
6 pursued with the change in superintendents of the
7 interim superintendent as she intends to continue the
8 department along that track. It may remain to be
9 seen whether the performance standards will, in fact,
10 yield you what you want.
11 You see, you shouldn't look at the
12 Special Ed. population as having different
13 expectations from the other students. So the same
14 standards should apply to them albeit maybe achieved
15 in a different way, maybe shown in a different way.
16 So you don't want to have -- you don't
17 want to create a different way of accounting for
18 effectiveness necessarily that's so apart from the
19 same standards that apply to regular students. But
20 at the same time you want to make sure that whatever
21 services you're delivering in the name of the Felix
22 case are, in fact, going to be what you started out
23 to deliver via the IEP.
24 Q. So we have the CSSS, comprehensive
25 student support system in place which in the vision
86
1 deals with all students.
2 A. Yes.
3 Q. In the lack of resources unfortunately
4 dealing heavily or almost exclusively with Felix
5 students and Special Ed. students but using a system
6 that would deal with each student under the
7 comprehensive student support system bigger tent so
8 to speak would be what you're suggesting?
9 A. That I don't know because we're not done
10 with our CSSS audit.
11 SENATOR SAKAMOTO: Okay. Thank you.
12 CO-CHAIR REPRESENTATIVE SAIKI: Thank
13 you. Co-Chair Hanabusa.
14 CO-CHAIR SENATOR HANABUSA: Thank you.
15 EXAMINATION
16 BY CO-CHAIR HANABUSA:
17 Q. Ms. Higa, on behalf of Co-Chair Saiki and
18 myself we'd also like to thank you and Mr. Kawashima
19 and we'd also like to take some time to just
20 acknowledge, not to embarrass them, but acknowledge
21 the people who have made the both of you and then us
22 look good and that is your staff Maria Chun, Urs
23 Bauder, Valerie Makino, Jade Takehiro and
24 Mr. Kawashima's staff Lyle Harada and his associate
25 Terry Kondo.
87
1 I don't want to embarrass them but of
2 course everybody who's been here knows that they sit
3 to my left on that long table and try not to make
4 faces at us, but it really is to all of your credit
5 that this investigative committee has been able to do
6 what it has.
7 Having said that, there is one question
8 that I think is gnawing at many of us plus many of
9 the parents and that's simply the issue of are the
10 children getting the services that we're paying for.
11 And I know it's a difficult question but is there a
12 way after going through all that we have gone through
13 that you believe that we can get to that specific
14 issue and come up with some kind of analysis. Are
15 they getting what we're paying for, are these
16 children being serviced?
17 A. We know they're being serviced. We don't
18 know if what they're being serviced with is what they
19 were supposed to have been serviced with, and we
20 don't know how effective those services are. We
21 could tell you a little bit if we had access to those
22 student records.
23 We could tell you further if we had
24 perhaps some other expertise that can then look at
25 those records and see if there are other ways to
88
1 deliver the services or other ways to measure
2 effectiveness. That part we don't know.
3 Q. Ms. Higa, isn't it rather ironic because
4 when you really think about it, isn't the whole
5 compliance issue supposed to be getting at that
6 specific topic when they say we are in compliance,
7 isn't it then assumed that what we have done is
8 rendered the services to that targeted population but
9 what we are finding is that that's not necessarily
10 the case?
11 A. Yes, and it is ironic because even as our
12 University of Pennsylvania consultants reported back
13 in January of this year when they first came here and
14 began to ask the relevant officials does the consent
15 decree require services and procedural compliance or
16 does the consent decree require effective services
17 they did not get a uniform answer in favor of
18 effective services.
19 Their read of the consent decree was yes,
20 the state was obligated to provide effective
21 services. Many of the indicators they saw then and
22 even then did not give them any assurance that we
23 were heading toward effective services. We were
24 simply looking at procedural compliance.
25 Q. If we're able to get the information as
89
1 you've stated and the legislature manages to find the
2 funding to provide the expertise, and that I believe
3 it's the state and I believe the committee feels as
4 well that it's the state's obligation to provide the
5 effective services; so to continue to monitor that is
6 that your recommendation even if you propose it like
7 you don't want to expand a kingdom that we continue
8 an audit function and would that audit function that
9 you're looking at include that type of analysis that
10 we're talking about here?
11 A. I believe it does because in addition to
12 the constitutional language that I believe makes us
13 the sole state audit agency FERPA has a provision
14 that says the educational audit agency has access to
15 the records. Now, we were told by the Deputy AG's
16 last year when we challenged this in court that we
17 are not the educational audit agency. DOE is the
18 educational audit agency, and I would beg to differ
19 and that is becoming the central issue here.
20 In addition to which we have other
21 protections for preserving the confidentiality of the
22 records that we attain. So we believe that those
23 protections are already in place and there is no
24 rational argument for denying us that access.
25 Q. Is it the Attorney General's position
90
1 that we the legislature can determine or define you
2 as the educational audit agency; and if we did that,
3 then there would be no question as to who becomes the
4 educational audit agency for the state of Hawaii?
5 A. We did not have that discussion with the
6 Deputy AG's, no.
7 Q. That's a discussion that we in the
8 legislature are going to have to have. We have made
9 certain requests, subpoena duces tecum bringing with
10 their documents when they come to testify through
11 this hearing. Can you tell us as it now stands
12 whether we have outstanding requests?
13 A. We still have a few IOU's, yes. I'm not
14 certain that they come under the umbrella of the
15 subpoenas, but there's various pieces I think the
16 Attorney General's attorney fees reports are not here
17 yet. We have not received, for instance,
18 Ms. Stocksdale's permission to obtain the tax
19 records.
20 Remember when she testified before you
21 she said she had no problem with your obtaining those
22 tax records. We sent -- the committee chairs sent a
23 letter to her asking her to sign off on that which is
24 what Department of Taxation required. As far as I
25 know, neither the chairs nor we nor the department
91
1 has received that permission from her yet. So that
2 we have not seen.
3 I believe there are small bits and pieces
4 yet but you see on top of that however, we do have --
5 we will probably still want some additional
6 information as we keep working at the draft. We
7 don't know, you know, whether we'll have any
8 difficulty getting them from the departments.
9 Q. In the past when you did the other audits
10 for the legislature especially the I guess the
11 February one, you did have problems getting
12 information, correct?
13 A. That's right.
14 Q. And it actually resulted with you going
15 to court and having your precept powers challenged?
16 A. Yes.
17 Q. Now, we have subsequently -- we the
18 legislature subsequently given you your own subpoena
19 powers.
20 A. Yes.
21 Q. Have you had any kind of resistance in
22 terms of compliance with that subpoena power?
23 A. Yes, we did issue a subsequent subpoena.
24 It's the same issue student records again. That was
25 for an audit which we expect to issue probably within
92
1 a month or so. That's another follow-up Felix audit.
2 There are certain issues left over from the
3 consultant's report that we wanted to pursue. For
4 that again because we're running out of time in
5 getting the information we struck a compromise with
6 the departments. I believe in that one they notified
7 the schools where we wanted to pull samples from and
8 if the parents did not object to our access to the
9 records, we were given access.
10 In the case of the students for whom
11 parents objected, then those records were not
12 available to us. What that does, however, is it
13 disturbs the scientific basis of the sample which is
14 our point. In auditing what you need to do is pull a
15 reliable sample and then be able to extrapolate your
16 comments to the entire population, and you cannot do
17 that unless you can attest to the validity of the
18 sample.
19 Q. In fact, isn't that one of the criticisms
20 that we have heard regarding the service testing was
21 the fact that the sampling procedure was not random
22 and therefore could be statistically challenged. Is
23 that along the same lines of what your concerns are?
24 A. Same argument.
25 Q. It's the same argument.
93
1 A. It's the same argument. You have to have
2 a random reliable sample. If you represent it to be
3 a random sample, then it must be random, truly
4 random.
5 Q. Have you attempted -- when I say you, I
6 mean the office of the auditor -- attempted to get
7 information directly from the monitor's office in the
8 past?
9 A. Yes, there was that one time when we
10 exercised anyone's right to ask for 4990 information
11 which is basically tax return information. And, you
12 know, I had a staff go over there, present the letter
13 which is what is permitted by federal statute and ask
14 for the records. He was told, oh, it will take us a
15 couple of hours to get them together and come back.
16 Come back, the door is locked. Knocks, they let him
17 in when they recognize him and he says I'm back for
18 the records. And the executive director says I have
19 nothing for you. And he says but you told me to come
20 back, I'm here. Well, I have nothing for you. And
21 he was sent out and we have to this date not received
22 those.
23 Q. There is a tension, Ms. Higa, I think
24 that is constantly running within the legislature
25 within the community and that is the idea that the
94
1 DOE should have further autonomy than what it does
2 have now and at the same time there is a concern of
3 oversight and accountability.
4 A. Yes.
5 Q. After these hearings, I know where I'm
6 falling in terms of that balance, but do you have an
7 opinion about that should this independence, should
8 the schools have more independence or should DOE have
9 more independence and/or and on the other side how
10 then do we have the accountability issue answered or
11 is that something that we're going to have to give up
12 if we do that?
13 A. I think very often you want to err on the
14 side of giving more flexibility, and I think you
15 have. I think over the years, you know, the changes
16 in the budgeting structure as they got bigger and
17 bigger lumps I think was the expectation that this
18 authority would not be abused, that there'd be
19 accountability for results.
20 But I don't see that that's happened and
21 yes, you'll probably hear from those who want more
22 flexibility but you might have to rethink the
23 flexibility you've given because you haven't gotten
24 the accountability that should have gone with it. So
25 in the absence of accountability you'll have to
95
1 impose more of your own.
2 Q. More of our own into the system itself?
3 A. Yes, more oversight, more requirements to
4 make sure you're getting the answers because
5 ultimately you're accountable for the expenditure of
6 those monies.
7 Q. This is going to sound like a kingdom
8 related issue and Sam can grimace if wants to, but
9 one of the items that this committee is faced with
10 and it's the fact that we expire for lack of a better
11 description we expire on I think on the first day of
12 the legislature in the year 2002 regular session.
13 Who knows how many we may go through between now and
14 then. But do you have a feeling one way or the other
15 for the committee as to whether you believe that this
16 committee should seek a continuation of its
17 existence? Yes, it is a costly venture, but it's
18 also something that we believe has to a certain
19 extent empowered many people who have been part of
20 this process. Would you make a recommendation to us?
21 A. You know, in the 30-plus years that I've
22 been to the office, I've actually done a lot of the
23 legislative liaison work for the office. And this is
24 the first time that I've seen a committee become so
25 educated on a subject, devote this much time on a
96
1 subject, and I think be as uniformed over a subject.
2 You know, I've observed joint committees
3 of various kinds. The cooperation and I think the
4 common viewpoint over the problem is not something
5 I've seen before. And yes, it's taken a lot of time
6 but I think it's been worth it, and I think going
7 into session and thereafter the individuals who sat
8 on this committee were much stronger members of your
9 respective committees. But more than that does the
10 legislature need for this committee to stay together
11 and continue to be perhaps the group that's going to
12 for want of a better term keep the pressure on to
13 make sure that you get answers because, you know,
14 there's still a lot of questions out there that are
15 going to remain even after your committee's report is
16 finished. Is it necessary? I believe so. Is it
17 necessary to fund it as it's been funded? Perhaps
18 not, but I couldn't tell you what it would cost if it
19 stayed together.
20 CO-CHAIR SENATOR HANABUSA: Thank you.
21 Thank you, Co-Chair Saiki.
22 CO-CHAIR REPRESENTATIVE SAIKI: Thank you
23 very much.
24 EXAMINATION
25 BY CO-CHAIR REPRESENTATIVE SAIKI:
97
1 Q. Ms. Higa, I just wanted to echo what
2 Co-Chair Hanabusa said earlier and that's to thank
3 you and your staff as well as Mr. Kawashima and his
4 attorneys. We also wanted to thank the members of
5 our respective legislative staff for all of their
6 work throughout the past few months as well as the
7 House Research Office, the Senate Research Office and
8 the Finance Committee Staff which served as our
9 committee clerk since June.
10 A. I should also mention the House Clerk's
11 Office has been the repository of the documents.
12 Q. I was going to mention the House Clerk's
13 Office and the Senate Clerk's Office as well.
14 My first question is this is in your
15 opinion based on the past few years, do you believe
16 that the legislature has impeded compliance efforts
17 at any time?
18 A. Impede, I don't think so, no, no.
19 Q. I wanted to ask you a question about
20 compliance because it's a term that's tossed about by
21 various parties. And when we talk about compliance
22 based on your work with the consent decree, what
23 exactly are we complying with, are we complying with
24 the requirements of federal law, are we complying
25 with standards that were made up by parties to the
98
1 lawsuit. What exactly are we complying with?
2 A. I think as a result of these hearings,
3 it's become evident that what the state has to comply
4 with is a moving target or has been a moving target.
5 You might recall that Mr. Omura said that he had a
6 certain perception because he was in a fairly high
7 position at the time the consent decree was struck.
8 He had a certain impression of what compliance would
9 be. For instance, that it was not 85 percent of each
10 complex, that it was a statewide standard. We had
11 other people testify as to what compliance meant.
12 There seems to have been some general
13 agreement that what the state agreed to in the
14 consent decree might have even exceeded what the
15 federal law requires of us. I guess the question is
16 are we stuck with it? Maybe we are. Maybe we're too
17 close to the end to try to get any of that changed,
18 but what was curious along the way were the various
19 changes that occurred in the requirements imposed on
20 the state. And how some of those changes -- it
21 struck me as curious, for instance, how some of those
22 changes were so easily made and at the same time
23 you're told that the consent decree is inviolate.
24 I'll give you an example. The technical
25 assistant panel was disbanded last year, and I'm not
99
1 so sure the legislature knew that. I'm not so sure
2 you knew that all of a sudden, then, we had to hire a
3 mainland recruiting firm. So it is a matter of
4 convenience for certain parties that changes can
5 occur but not so convenient for other parties when
6 other changes are requested. So I'm not sure if
7 compliance in and of itself has been clear.
8 When we did our audits back the first one
9 was in '98 it was issued in '98, even then people in
10 the field we're saying we don't know what it means
11 we're not even sure what Felix means, and I think
12 that's been the experience ever since.
13 Q. Over the past especially over the past
14 two or three years the legislature has been faced
15 with ultimatums basically we've been told that we
16 need to fund all of the benchmarks, all of the
17 implementation plans that are put together by the
18 federal court and the parties to the lawsuit and that
19 the consequence of not funding these requests would
20 be contempt orders or non-compliance orders.
21 A. That's right.
22 Q. How valid are, just based on your work
23 over the past few months, how valid are these
24 benchmarks and implementation plans?
25 A. Well, some of them again makes us wonder
100
1 why they're there in the first place and why they
2 became a benchmark. I think you heard testimony from
3 the Department of Health, for instance, that court
4 monitor inserted an item as a result of plans that
5 the department had drafted and they had no control
6 over which item in their plans became a benchmark and
7 which ones didn't. But it seems also a little
8 peculiar and I think when you were presented with
9 that in the 2000 session it was well, you have to
10 fund it because it's a requirement of the consent
11 decree.
12 Well, how did it happen to get into the
13 consent decree in the first place? This was an
14 experiment. Why is an experiment being put in there
15 as a requirement upon the state and upon the children
16 and this is a program that's privately owned, a
17 program on which the eventual first director has
18 co-authored a paper several years before, it's a
19 program that's been evaluated by the developer only
20 primarily and it was never told to you that some of
21 it would be so experimental in the second year.
22 This genesis of this was a consent decree
23 but what was the background before it became part of
24 the consent decree? We don't know.
25 Q. In that respect, what was the role or
101
1 what is the role of the court monitor, the federal
2 court monitor in ensuring the integrity of
3 implementation plans, benchmarks, service testing?
4 A. We don't know. Service testing as an
5 instrument has not been scientifically developed yet.
6 Q. Do you have any indication that the court
7 monitor did provide independent oversight over the
8 integrity of these kinds of requirements?
9 A. We can't tell, no.
10 Q. Do you know whether or not there was
11 actually abuse at the federal court monitor's level
12 as well?
13 A. I'm not sure what you mean by "abuse."
14 Q. Well, in terms of in the manner that
15 implementation plans were promulgated in ensuring
16 that there was proper checks and balances?
17 A. There is no way to tell because again we
18 had no access to any of that information. We don't
19 know if the plaintiff attorneys were the ones calling
20 the shots, we don't know if the technical assistance
21 panel that was calling the shots, we don't know if
22 the individuals on the technical assistant panels
23 were calling the shots. It's a little hard to tell.
24 We've seen subsequent work from members
25 of the technical assistance panel; so we don't know
102
1 if some of these requirements are there in order to
2 assure continuous employment. Our University of
3 Pennsylvania consultants said to us soon after they
4 got here what you have is a full employment act for
5 mental health professionals.
6 CO-CHAIR REPRESENTATIVE SAIKI: Thank you
7 very much, Ms. Higa. At this point we'll take
8 follow-up questions first with Special Counsel
9 Kawashima.
10 SPECIAL COUNSEL KAWASHIMA: I have none.
11 CO-CHAIR REPRESENTATIVE SAIKI: Thank
12 you. Members, follow-up questions. Senator Slom.
13 SENATOR SLOM: Thank you.
14 FURTHER EXAMINATION
15 BY SENATOR SLOM:
16 Q. Just a few follow-up questions. First of
17 all, you know, we've heard time and time again that
18 nobody raised questions about practices that went on,
19 decisions that were made and all that. You did three
20 audits. You also had an audit on the DOE. You also
21 had an audit on the Department of Health.
22 Wouldn't a normal rational reasonable
23 prudent person be alerted that questions should be
24 asked at that time?
25 A. Well, with each audit, we were met with
103
1 criticism. When we did the one in '98, the criticism
2 was well, you didn't have an expert on your team
3 despite the fact that the in-charge on that is a
4 Ph.D. psychologist on my staff who has returned and
5 she is Dr. Maria Chun who is currently in charge with
6 us now. So the legislature said well, okay, we'll
7 give you some money, go hire out for the expertise
8 which we did. We brought folks in from Pennsylvania.
9 The department criticized that because they were from
10 the center for social welfare, something like that,
11 social policy.
12 They were mental health professionals.
13 They had worked with children. The dean of the
14 school had served as a court monitor. The other
15 principal investigator had worked in Congress when
16 IDEA was passed had a long history. That wasn't good
17 enough for the critics; so we were told no, that
18 wasn't good enough. Your audit is still not valid.
19 That was then subsequently followed by the concurrent
20 resolution that created this committee.
21 Q. So would that be a further explanation of
22 why other people, well-meaning people within the DOE
23 and even within the DOH who came forward later said
24 that they did so reluctantly and with fear because
25 their supervisors were the ones that were resisting
104
1 and being critical?
2 A. That's probably a generalization you can
3 make, yes.
4 Q. Okay. You mentioned the technical
5 assistance panel and one of the original members was
6 Ms. Behar who you also mentioned.
7 A. Yes.
8 Q. And she is currently under indictment in
9 the state of North Carolina?
10 A. That's right.
11 Q. Do you feel that the federal government
12 will be involved in any way here with the use or
13 possible misuse of federal impact funds?
14 A. I don't know at this point. My
15 understanding is the requirements in the part of the
16 federal government for impact aid are fairly
17 generous. It's intended to be a reimbursement to the
18 state for what the state puts out to educate the
19 children of the military or those civilians who work
20 on military installations.
21 There are other federal monies that may
22 have been expended as well improperly perhaps. At
23 this point, I don't know if the federal government
24 will enter the picture yet.
25 Q. Would the position that the federal court
105
1 specifically Judge Ezra and the federal court monitor
2 have taken would that hinder any possibility of
3 federal intervention or federal investigation?
4 A. I don't know. It might depend on what
5 further information we might be able to get.
6 Q. Okay. And the question came up again
7 about the original consent decree and everything else
8 and everybody including this committee has been very
9 concerned to make sure that the Felix kids get what
10 they are supposed to get both in terms of quality and
11 quantity, but is it not a fact that we totally
12 overlooked the so-called regular education kids and
13 that other group that was in there called the gifted
14 and talented, the other kids in other words all the
15 focus and attention has been on Felix and there has
16 been an indication from parents and others that
17 because of that we've not done what we're supposed to
18 do in those specific areas?
19 A. When we did our prior audits, we had
20 people at the schools tell us that so much of their
21 time and what they felt was a disproportionate amount
22 of their time was spent on the Felix population.
23 Now, part of this might be explainable because we
24 were ramping up the system of care. It's always been
25 an issue as to whether the regular education students
106
1 are being shortchanged as a result of what has
2 happened.
3 It's a little hard to say except if you
4 look at the fact that the state's resources are
5 finite and if you have to cut it in x-number of ways.
6 If you're cutting it so that the Felix needs come off
7 on top and the rest have to then share the remainder,
8 I can see why there is that perception that they get
9 the leftovers, that they have to share what is left.
10 If you look at the per capita
11 distribution which I think we're trying to do with
12 our other audit, so I don't have figures for you any
13 way. I couldn't tell you even if I have them on the
14 tips of my finger. I don't know if those are
15 disproportionate to other state's experiences for
16 Special Ed. costs. But it's still also true that the
17 Felix population probably does require a great deal
18 of attention from everybody because their needs are
19 specialized.
20 In many cases you are working case by
21 case by case; whereas, our regular Ed. children tend
22 to be sort of lumped together but maybe with this
23 committee's work and maybe with some halt to the
24 unnecessary spending you can take care of what you
25 have to do for Felix population and still have some
107
1 money left over for the regular Ed. children.
2 Q. I have one final question and a brief
3 final comment. The final question is we're talking
4 about the moving target getting away from what the
5 original consent decree actually said what it
6 required us to do, and you've given examples of how
7 we've added experimentation and we've added a lot of
8 these other things basically without question and
9 with provability. I'm concerned now in the last days
10 of the investigation that we've had people coming
11 forward and talking specifically about two areas
12 medical monitoring and respite care.
13 A. Yes.
14 Q. And what I'm concerned about is several
15 things. First of all, again, we're trying to make
16 teachers and educators into physicians or into
17 medical personnel. I'm concerned that when this
18 decree is finally over that we have started a process
19 now which is going to require the state, not only to
20 continue medical monitoring which has financial
21 implications of its own and respite care that's going
22 to go beyond the consent decree, is going to open it
23 up and expand it to other people, it may possibly
24 hold the state open for reliability and other
25 problems. Am I being irrational about this or is
108
1 this a reasonable concern?
2 A. I think it's a reasonable concern more so
3 for the medical monitoring than for the respite care.
4 The respite care is an issue that I think you can tie
5 more closely to the issue of how effective these
6 services and therefore are they necessary for the
7 state to provide. Respite care, respite services are
8 services to the parents or the caregivers of the
9 children. They're not services to the child. And so
10 the issue is if the state's obligation is to provide
11 services to the child to enable the child to benefit
12 from education, then how do these services to the
13 caregiver or the parent then translate into more
14 effective educational experiences for the child?
15 If you start emphasizing more and more
16 that we're going to pay only for effective services,
17 you may be able to get a handle and have a more
18 rational basis for looking at the respite care costs.
19 Medical monitoring is a different sort of problem,
20 and I'm not sure that the answer there is as easy to
21 get at as the case of respite care.
22 Yes, there is a possibility that we may
23 now be looking at many more services will be
24 obligated to provide that are more medical than they
25 are educational.
109
1 Q. And then finally the statement that I
2 want to make was you were asked the question about
3 whether or not this committee should continue, and I
4 know questions have arisen from the public because
5 you say it is a costly or it has been a costly
6 venture and all that but I think we should reassure
7 and inform the public that the legislatures on this
8 committee have not benefitted unlike the plaintiffs'
9 attorneys who have benefitted from continuing the
10 process that we don't get any additional salaries or
11 compensation or benefits from this or from three,
12 four or five special sessions so I just want to put
13 that on the record. Again thank you, Ms. Higa.
14 Thank you, Co-Chair.
15 CO-CHAIR REPRESENTATIVE SAIKI: Thank
16 you. Representative Ito.
17 REPRESENTATIVE ITO: Thank you very much,
18 Co-Chair Saiki.
19 FURTHER EXAMINATION
20 BY REPRESENTATIVE ITO:
21 Q. Ms. Higa.
22 A. Yes.
23 Q. Have you heard other states watching
24 Hawaii in these proceedings?
25 A. That's what I've been told, yes. Hawaii
110
1 is being watched by mental health community across
2 the county, by the educational community across the
3 county and by virtually everybody else because there
4 is this belief that there is this web being created
5 by some of the providers to set up for themselves
6 these interlocking businesses. And if they can set
7 up similar situations as here where they go in with a
8 case, prevail in a case, present themselves as the
9 experts to solve the problem, then bring in others
10 that they know to help solve the problem, then they
11 have provided for themselves a basis for even more
12 work.
13 My understanding is the service testing
14 instrument has been modified and is in use in Utah
15 and Alabama. I think I've seen the one for Utah
16 where there is some discussion of its prior use in
17 Hawaii. We do know that some of the principals
18 involved have established themselves in those other
19 states, yes.
20 Q. You know, Ms. Higa, since this is a
21 federal consent decree and we're working with federal
22 monies, a copy of this, you know, proceedings you
23 recommend it goes to the FBI since we have this band
24 of people roaming the country side as a nationwide
25 nation?
111
1 A. Well, I don't know. If the FBI is
2 interested, they can talk to us for sure.
3 Q. Okay. Thank you.
4 A. They may become interested after you
5 issue your report.
6 Q. Because I think, you know, this is the
7 kind of oversight that we need on the federal level.
8 Lastly you know the service testing, I went to
9 several and I always see the plaintiffs' attorneys
10 there with the court monitor. Is there a reason for
11 that?
12 A. I think that was provided for in the
13 consent decree that there would be a panel of three,
14 the court monitor and two plaintiff attorneys that
15 sit as the jury on the presentation portion of the
16 service testing process.
17 Q. It looks like the fox and the chicken
18 coup type of situation.
19 A. Your words, not mine.
20 REPRESENTATIVE ITO: Thank you very much.
21 CO-CHAIR REPRESENTATIVE SAIKI: Thank
22 you. Representative Kawakami.
23 EXAMINATION
24 BY REPRESENTATIVE KAWAKAMI:
25 Q. Just one question, Ms. Higa. There were
112
1 parent councils that were formed in every community?
2 A. Yes, that's right.
3 Q. What happened to them and what was their
4 role? We never heard very much about them, and I
5 understand they were paid. Am I correct?
6 A. That's right. They were called
7 children's coordinating councils and I forget how
8 many there were, maybe 15 or 16 of them. It wasn't
9 all that clear what they were supposed to do. My
10 understanding is they started out as advisory and to
11 some extent they began to take on some decision
12 making authority.
13 They were disbanded sometime in 2000, but
14 yes, the members were paid. I think it was $26.00 a
15 day or $26.00 for attending every meeting and somehow
16 the consent decree was changed to eliminate them
17 sometime in 2000. I don't know why.
18 Q. Do you know why? Was that a request of
19 the schools or?
20 A. I don't know why, no.
21 Q. No, okay. Just curious because they fell
22 apart and nothing was heard from them after that and
23 no squawks and, you know. But thank you very much.
24 Thank you, Chair.
25 CO-CHAIR REPRESENTATIVE SAIKI: Thank
113
1 you. Senator Sakamoto.
2 SENATOR SAKAMOTO: Thank you, Chair.
3 EXAMINATION
4 BY SENATOR SAKAMOTO:
5 Q. You know, as we've been talking and
6 obviously a lot of concerns or problems in the past
7 and I believe unfortunately many of the problems of
8 the past have been about who pays and there is not
9 enough money to pay. And I believe through the
10 process and it's still continuing the issue about is
11 who served and who can be best served and how can we
12 best serve them that will continue. The question
13 about who pays as opposed to Department of Education
14 or education funds pay everything. I think that's
15 the question for the future.
16 I don't think it's a question of how do
17 we serve the children that need help like this. The
18 issue is how do we pay for what services we need and
19 from my personal belief it doesn't or shouldn't all
20 come from the state nor should it all come from the
21 Department of Education's funding stream; so that's
22 an issue that we have to deal with going forward. So
23 can you comment?
24 A. The IDEA is up for reauthorization this
25 coming year in Congress. There are differing
114
1 opinions about this, but it seems as though when
2 Congress first imposed this mandate on the states it
3 seemed to have promised to pay up to 40 percent of
4 this incremental cost. There are differences as to
5 whether, in fact, it was a promise or not a promise.
6 In fact, it's paying somewhere's up to 12 percent of
7 our costs now.
8 So whether you have recourse from with
9 the federal government to come up with at least more
10 of that difference or not is something you might have
11 to work out with your delegation, but it should be
12 something that's put on the table because the
13 legislation is up for reauthorization.
14 SENATOR SAKAMOTO: Thank you, Chair.
15 CO-CHAIR REPRESENTATIVE SAIKI: Thank
16 you, Members. Any other follow-up questions? If
17 not, okay Members, this will conclude our testimony
18 from Ms. Higa. Thank you very much for testifying.
19 THE WITNESS: You're welcome. My
20 pleasure.
21 CO-CHAIR REPRESENTATIVE SAIKI: At this
22 point the co-chairs would like to recommend that we
23 convene in the executive session for the purpose of
24 discussing the witness statement submitted by Mr. Don
25 Burger from PREL and also to discuss the course of
115
1 action to be taken by this committee with respect to
2 the quashing of the subpoenas by the federal court.
3 And Members, the third item that we'll be
4 discussing in executive session is the potential
5 issuance of further subpoenas. Is there any
6 discussion? If not, we'll take a roll call.
7 CO-CHAIR SENATOR HANABUSA: Co-Chair
8 Saiki?
9 CO-CHAIR REPRESENTATIVE SAIKI: Yes.
10 CO-CHAIR SENATOR HANABUSA: Senator Buen?
11 SENATOR BUEN: I.
12 CO-CHAIR SENATOR HANABUSA:
13 Representative Ito?
14 REPRESENTATIVE ITO: I.
15 CO-CHAIR SENATOR HANABUSA:
16 Representative Kawakami?
17 REPRESENTATIVE KAWAKAMI: I.
18 CO-CHAIR SENATOR HANABUSA:
19 Representative Leong?
20 REPRESENTATIVE LEONG: I.
21 CO-CHAIR SENATOR HANABUSA:
22 Representative Marumoto is excused. Representative
23 Oshiro is excused. Senator Sakamoto?
24 SENATOR SAKAMOTO: Yes, I am.
25 CO-CHAIR SENATOR HANABUSA: Senator Slom?
116
1 SENATOR SLOM: I.
2 CO-CHAIR REPRESENTATIVE SAIKI: Thank
3 you, Members. We will meet in Room 325 and we'll
4 reconvene this public hearing in this room at
5 1:00 p.m.
6 (Recess from 12:00 p.m. to 1:28 p.m.)
7 CO-CHAIR REPRESENTATIVE SAIKI: Members,
8 we'd like to reconvene our public hearing. We have
9 two matters to take care of. First the written
10 submission of Don Burger from PREL. This statement
11 was submitted to the committee for its consideration
12 on October 12, 2001.
13 The recommendation of the Co-Chairs is to
14 accept the written statement as well as the four
15 exhibits attached to the statement. Is there any
16 discussion on this motion? If not, we'll take a roll
17 call vote.
18 CO-CHAIR SENATOR HANABUSA: Co-Chair
19 Saiki?
20 CO-CHAIR REPRESENTATIVE SAIKI: Yes.
21 CO-CHAIR SENATOR HANABUSA: Senator
22 Kokubun is excused. Senator Buen?
23 SENATOR BUEN: I.
24 CO-CHAIR REPRESENTATIVE SAIKI:
25 Representative Ito?
117
1 REPRESENTATIVE ITO: I.
2 CO-CHAIR SENATOR HANABUSA:
3 Representative Kawakami?
4 REPRESENTATIVE KAWAKAMI: I.
5 CO-CHAIR SENATOR HANABUSA:
6 Representative Leong?
7 REPRESENTATIVE LEONG: I.
8 CO-CHAIR SENATOR HANABUSA:
9 Representative Marumoto is excused. Representative
10 Oshiro is excused. Senator Sakamoto?
11 SENATOR SAKAMOTO: Yes, ma'am.
12 CO-CHAIR SENATOR HANABUSA: Senator Slom?
13 SENATOR SLOM: I.
14 CO-CHAIR SENATOR HANABUSA: Motion is
15 carried.
16 CO-CHAIR REPRESENTATIVE SAIKI: Thank
17 you, Members. The Co-Chairs will handle the second
18 recommendation.
19 CO-CHAIR SENATOR HANABUSA: Members, the
20 second recommendation involves the quashing of the
21 subpoenas of this committee. In particular we are
22 looking at the subpoena of Judith Schrag. It is the
23 recommendation of the Co-Chairs and we are using it
24 to a motion that we authorize our attorneys to seek
25 enforcement of that subpoena of Judith Schrag in the
118
1 appropriate judicial venues to exercise and to
2 exercise all options necessary to that end including
3 the disqualification of Judge Ezra.
4 Members, do we have any discussion on
5 this motion? Senator Slom.
6 SENATOR SLOM: Co-Chair, as reluctant as
7 I am always to say things, let me say that first of
8 all I think the auditor was quite correct when she
9 said this committee has worked together for a long
10 time. We've learned a lot of things. We take our
11 responsibility seriously and ultimately we are
12 accountable not only do we dispense the money, but
13 we're accountable for what happens and what does not
14 happen on our watch. And the fact that statements
15 have been made by the federal court statements which
16 I personally consider to be demeaning and outrageous
17 we have been broadsided by the federal court. We
18 have been blocked in our attempts to get information.
19 But more so instead of attacking us, I think the
20 federal court has attacked the people of Hawaii, the
21 taxpayers and the children and ultimately that's what
22 we're here for to make sure that they get the
23 services but at the price that we can afford and in
24 the matter in which and the quality to which they're
25 entitled.
119
1 One has to ask the question what is the
2 federal court afraid of, what are they hiding, and
3 why are they protecting people. We have individuals
4 that have worked in this state, that made money off
5 this state, made money off the taxpayers. We have
6 people that are under indictment or possible
7 indictment and I think that at the very least the
8 federal court owes this community as well as this
9 legislature an apology for what it's done, and I
10 think that we should proceed in all haste. Thank
11 you.
12 CO-CHAIR SENATOR HANABUSA: Thank you.
13 Any other members wishing to address this particular
14 motion? Co-Chair Saiki.
15 CO-CHAIR REPRESENTATIVE SAIKI: If not,
16 Members, we'll take a roll call vote. Co-Chair
17 Hanabusa?
18 CO-CHAIR SENATOR HANABUSA: I.
19 CO-CHAIR REPRESENTATIVE SAIKI: Senator
20 Buen?
21 SENATOR BUEN: I.
22 CO-CHAIR REPRESENTATIVE SAIKI:
23 Representative Ito?
24 REPRESENTATIVE ITO: I.
25 CO-CHAIR REPRESENTATIVE SAIKI:
120
1 Representative Kawakami?
2 REPRESENTATIVE KAWAKAMI: I.
3 CO-CHAIR REPRESENTATIVE SAIKI:
4 Representative Leong?
5 REPRESENTATIVE LEONG: I.
6 CO-CHAIR REPRESENTATIVE SAIKI: Senator
7 Sakamoto?
8 SENATOR SAKAMOTO: Yes, sir.
9 CO-CHAIR REPRESENTATIVE SAIKI: Senator
10 Slom?
11 SENATOR SLOM: Most vigorous I.
12 CO-CHAIR REPRESENTATIVE SAIKI: Eight
13 vigorous I's; zero no's.
14 CO-CHAIR SENATOR HANABUSA: Thank you,
15 Members. I believe that concludes the hearing.
16 Members and for members of the public, the
17 transcripts of the hearings that we have held as soon
18 as the recent ones are transcribed will all be
19 available for your review on the web. So you'll have
20 accessibility through the Internet. Any other
21 matters?
22 Members, any other remarks? If not, we
23 will be adjourning the hearing subject to further
24 call by the Co-Chairs. I'm sorry. Withdrawn.
25 There's one other issue that we wanted to bring forth
121
1 and this was as a result of the responses from our
2 auditor, and that is at this committee the Co-Chairs
3 would like to recommend and we believe it is the
4 sentiment of this committee that a recommendation
5 that be placed in the auditor's report is the
6 continuation of this committee and as we all know we
7 need another concurrent resolution, and we would like
8 to have that set forth in the auditor's
9 recommendations. And as an affirmative vote today,
10 we are saying that the members of the committee are
11 also in favor of asking not only our colleagues but
12 also the community for the continued support of this
13 Felix investigative committee.
14 So the motion is to recommend that this
15 committee be continued past our expiration date of
16 the first day of the 2002 legislature. Any
17 discussion?
18 A point of clarification the committee's
19 report as you all know will be written by the
20 auditor, and if there is a confusion in what I said,
21 I didn't mean to imply that it's going to be the
22 auditor's report. The report that comes out is the
23 committee's report. When I referenced the auditor's
24 recommendation, I was talking about her response to a
25 question that I raised as well as Senator Slom that
122
1 she felt that this committee should also continue.
2 So with that -- yes, Senator Slom.
3 SENATOR SLOM: Just to comment I would
4 like to say that from the very outset there were a
5 lot of people who did not want to see this committee
6 formed in the first place and operational, and there
7 were a lot of people that were very happy that we
8 were going to sunset at the beginning of the
9 legislature.
10 I think what we found out is much more
11 than what we were seeking originally. We want to see
12 this through, we want to see solutions, we want to
13 make sure that the recommendations are followed, that
14 reports like the auditor, she's been very meticulous
15 in the years past they have not been implemented. I
16 think we accept that as part of our accountability
17 and responsibility so we want that to continue.
18 CO-CHAIR SENATOR HANABUSA: Thank you,
19 Senator Slom. Any other comments?
20 CO-CHAIR REPRESENTATIVE SAIKI: If not,
21 Members, we'll take a roll call vote. Co-Chair
22 Hanabusa?
23 CO-CHAIR SENATOR HANABUSA: I.
24 CO-CHAIR REPRESENTATIVE SAIKI:
25 Senator Buen?
123
1 SENATOR BUEN: I.
2 CO-CHAIR REPRESENTATIVE SAIKI:
3 Representative Ito?
4 REPRESENTATIVE ITO: I.
5 CO-CHAIR REPRESENTATIVE SAIKI:
6 Representative Kawakami?
7 REPRESENTATIVE KAWAKAMI: I.
8 CO-CHAIR REPRESENTATIVE SAIKI:
9 Representative Leong?
10 REPRESENTATIVE LEONG: I.
11 CO-CHAIR REPRESENTATIVE SAIKI: Senator
12 Sakamoto?
13 SENATOR SAKAMOTO: Yes, sir.
14 CO-CHAIR REPRESENTATIVE SAIKI: Senator
15 Slom?
16 SENATOR SLOM: Let's roll.
17 CO-CHAIR REPRESENTATIVE SAIKI: Eight
18 I's, zero no's. That's it.
19 CO-CHAIR SENATOR HANABUSA: Are we
20 finally at the end?
21 CO-CHAIR REPRESENTATIVE SAIKI: Any other
22 matters, Members.
23 CO-CHAIR SENATOR HANABUSA: Any other
24 matters, anything else that we may have forgotten?
25 If not, again we will be in recess until the
124
1 Co-Chairs call you back.
2 Members, remember we will have to come
3 back to vote upon the report of this committee and
4 again after that to vote upon the final report. So
5 with that Co-Chair Saiki.
6 CO-CHAIR REPRESENTATIVE SAIKI: We're
7 adjourned.
8 CO-CHAIR SENATOR HANABUSA: Thank you
9 very much.
10 (Hearing adjourned at 1:34 p.m.)
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
125
1 C E R T I F I C A T E
2 STATE OF HAWAII )
) SS:
3 CITY AND COUNTY OF HONOLULU )
4 I, MYRLA R. SEGAWA, Notary Public, State of
5 Hawaii, do hereby certify:
6 That on Friday, November 16, 2001, at
7 9:11 a.m., 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
11 correct transcript of the proceedings had in the
12 foregoing matter.
13 I further certify that I am not an attorney
14 for any of the parties hereto, nor in any way
15 concerned with the cause.
16 DATED this 30th day of NOVEMBER 2001, in
17 Honolulu, Hawaii.
18
19
20
21
______________________________
22 MYRLA R. SEGAWA, CSR No. 397
Notary Public, State of Hawaii
23 My Commission Exp: 1-27-2005
24
25