2010-1793 SCR SMA

WHEREAS, the State of Hawaii is currently in the midst of an economic recession, whereby every dollar in the State's budget would help the State maintain essential services and reduce its budget deficit; and

WHEREAS, the State previously purchased $1,100,000,000 in student loan auction rate securities (SLARS) from Salomon Smith Barney, which represents nearly twenty-five per cent of the State's total investment in securities; and

WHEREAS, due to the financial collapse of the securities market the assets have been frozen and the State is unable to utilize the $1,100,000,000 in SLARS; and

WHEREAS, six months ago the State Auditor required the State to revalue the SLARS at $114,000,000 less than what the State paid and other subsequent revaluations of the SLARS have estimated the loss at $254,000,000; and

WHEREAS, it has been asserted by the State Auditor that a portion of the SLARS were purchased in violation of State laws that specify the maximum period of maturity and the minimum financial rating that investment purchases must have; and

WHEREAS, a secondary market reportedly exists for the State to sell the SLARS at a discount; and

WHEREAS, the State Auditor issued a report citing several inadequacies, oversight, and legal violations in the purchase of the SLARS by Department of Budget and Finance officials; and

WHEREAS, there has been widespread disagreement between the State Auditor, the Director of Finance, and the Administration regarding the legality and fiscal integrity of the SLARS investments; and

WHEREAS, a joint legislative special investigating committee would help to provide answers to questions surrounding the SLARS investments and help to clear the record between the State Auditor's assertions and the Department of Budget and Finance's legal obligations; and

WHEREAS, section 21-3, Hawaii Revised Statutes, authorizes the establishment of a legislative investigating committee by resolution, and Rule 14(3) of the Rules of the Senate allow for the establishment of special investigative committees; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-fifth Legislature of the State of Hawaii, Regular Session of 2010, the House of Representatives concurring, that:

(1) The Legislature hereby jointly establishes a joint legislative special investigating committee pursuant to chapter 21, Hawaii Revised Statutes, to oversee the investigation of the Department of Budget and Finance's handling of the State's investment in student loan auction rate securities;

(2) The purpose and the duties of the investigating committee and the subject matter and scope of its investigatory authority shall be to assist the independent attorney in charge of the investigation by holding meetings and hearings as requested, receiving all information from the investigation, and submitting a final report to the Legislature;

(3) The investigating committee shall have every power and function allowed to an investigating committee under the law, including without limitation the power to:

(A) Adopt rules for the conduct of its proceedings;

(B) Issue subpoenas requiring the attendance and testimony of witnesses and subpoenas duces tecum requiring the production of books, documents, records, papers, or other evidence in any matter pending before the investigating committee;

(D) Administer oaths and affirmations to witnesses at hearings of the investigating committee;

(E) Report or certify instances of contempt as provided in section 21-14, Hawaii Revised Statutes;

(F) Determine the means by which a record shall be made of its proceedings in which testimony or other evidence is demanded or adduced;

(G) Provide for the submission, by a witness's own counsel and counsel for another individual or entity about whom the witness has devoted substantial or important portions of the witness's testimony, of written questions to be asked of the witness by the chair; and

(H) Exercise all other powers specified under chapter 21, Hawaii Revised Statutes, with respect to an investigating committee; and

(4) The investigating committee shall consist of six members, comprised of one budget chair from the Senate, one budget chair from the House, one majority member from the Senate who shall be appointed by the Senate President, one majority member from the House who shall be appointed by the Speaker of the House of Representatives, one minority member from the Senate who shall be appointed by the Senate President, and one minority member from the House who shall be appointed by the Speaker of the House of Representatives; and

BE IT FURTHER RESOLVED that the Senate President and the Speaker of the House of Representatives, from time to time, may refer to the investigating committee specific matters that are within the scope of the committee's jurisdiction, and that the investigating committee shall work in cooperation with the President and the Speaker for the purposes stated in this Concurrent Resolution; and

BE IT FURTHER RESOLVED that the investigating committee shall submit its written findings and recommendations to the Legislature no later than twenty days prior to the convening of the Regular Session of 2011; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor, President of the Senate, Speaker of the House of Representatives, Director of Finance, Attorney General, and the State Auditor.

Report Title:

Auction Rate Securities; Investigation; Investigating Committee

THE SENATE	S.C.R. NO.	18
TWENTY-FIFTH LEGISLATURE, 2010		S.D. 1
STATE OF HAWAII		Proposed