HB1491 HD1.DOC

SECTION 1. The legislature finds that public funds are meant to further the public good and ensure that state government operates efficiently and effectively. It is imperative that state revenues be spent in a fiscally responsible manner and that state agencies be held accountable for their use of public funds.

The legislature further finds that the University of Hawaii is exempt from certain budgetary oversights and controls, which limits transparency and may cause difficulties in ensuring that the university is properly accountable for its use of public funds.

Consequently, the legislature finds and declares that the manner in which the University of Hawaii manages the public funds entrusted to it is a matter of statewide concern and therefore under the legislature's purview pursuant to article X, section 6 of the Hawaii state constitution.

Accordingly, the purpose of this Act is to:

(1) Expand the department of budget and finance's authority to modify and withhold the university's planned expenditures; and

(2) Require the university to receive legislative authorization prior to any appropriation transfers or changes between programs or agencies.

SECTION 2. Section 37-74, Hawaii Revised Statutes, is amended by amending subsections (c) and (d) to read as follows:

"(c) The department of budget and finance shall:

(1) Review each operations plan to determine:

(A) That it is consistent with the policy decisions of the governor and appropriations by the legislature;

(B) That it reflects proper planning and efficient management methods; and

(C) That appropriations have been made for the planned purpose and will not be exhausted before the end of the fiscal year;

provided that the department of budget and finance shall review the operations plan submitted by the University of Hawaii solely for consistency with the allotment ceilings established by the governor under section 37-34, appropriations by the legislature, the requirements of chapter 37D, and the status of revenues to support operations plans for all state programs;

(2) Approve the operations plan if satisfied that it meets the requirements under paragraph (1). Otherwise, the department of budget and finance shall require revision of the operations plan in whole or in part; and

(3) Modify or withhold the planned expenditures at any time during the appropriation period if the department of budget and finance finds that the expenditures are greater than those necessary to execute the programs at the level authorized by the governor and the legislature, or that state receipts and surpluses will be insufficient to meet the authorized expenditure levels[~~; provided that the planned expenditures for the University of Hawaii may be modified or withheld only in accordance with sections 37-36 and 37-37~~].

(d) No appropriation transfers or changes between programs or agencies shall be made without legislative authorization; provided that:

(1) Authorized transfers or changes, when made, shall be reported to the legislature;

(2) Except [with respect to appropriations to fund financing agreements under chapter 37D, the University of Hawaii shall have the flexibility to transfer appropriated funds and positions for the operating cost category among programs, among cost elements in a program, and between quarters, as applicable; except] with respect to appropriations to fund financing agreements under chapter 37D, the department of education shall have the flexibility to transfer appropriated funds and positions for the operating cost category among programs and among cost elements in a program, and between quarters, as applicable; and the Hawaii health systems corporation and its regional system boards shall have the flexibility to transfer special fund appropriations among regional system hospital facilities as applicable and as mutually agreed to by the corporation and the respective regional system board; provided that the Hawaii health systems corporation and the regional system boards shall maintain the integrity and services of each individual regional system and shall not transfer appropriations out of any regional system that would result in a reduction of services offered by the regional system, with due regard for statutory requirements, changing conditions, the needs of the programs, and the effective utilization of resources; and

(3) The [~~university and the~~] department of education shall account for each transfer implemented under this subsection in quarterly reports to the governor and annual reports at the end of each fiscal year to the legislature and the governor, which shall be prepared in the form and manner prescribed by the governor and shall include information on the sources and uses of the transfer."

SECTION 2. Statutory material to be repealed is bracketed and stricken.

SECTION 3. This Act shall take effect on July 1, 2525.

HOUSE OF REPRESENTATIVES	H.B. NO.	1491
TWENTY-SEVENTH LEGISLATURE, 2014		H.D. 1
STATE OF HAWAII