STAND. COM. REP. NO. 1006-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2474
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Education, to which was referred S.B. No.
2474, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO FEDERAL AID,"

begs leave to report as follows:

     The purpose of this bill is to require the Governor to allow
the Department of Education (DOE) to:

     (1)  Increase the federal fund expenditure ceiling for EDN
          100, School-Based Budgeting, to the amount that federal
          impact aid received, exceeds authorized General
          Appropriations Act or Supplemental Appropriations Act
          appropriations; and

     (2)  Retain for EDN 100 purposes, the full amount of any
          general fund offset created by increased impact aid
          receipts, provided that the DOE does not create or
          expand programs.

     This bill also requires that all federal fund reimbursements
received by state programs be returned to the general fund or
other appropriate program funds unless otherwise required by
federal or state law.

     The DOE and the Hawaii State Teachers Association testified
in support of the bill.  The Department of Budget and Finance
testified in support of the intent of the measure.

 
 
                                 STAND. COM. REP. NO. 1006-00
                                 Page 2

 
     Your Committee believes that in these difficult fiscal
times, state departments should be encouraged to seek funding
from outside sources whenever possible.  

     Your Committee has amended this bill by deleting its
contents and replacing it with the contents of H.B. No. 1873,
H.D. 2, which was reported from the House after public hearings
before your Committees on Education and Finance.  H.B. No. 1873,
H.D. 2 provides the DOE with additional incentives to seek
alternate funding sources by:

     (1)  Exempting DOE's federal and trust funds from the state
          budgetary allotment system requirements; and

     (2)  Prohibiting general fund offsets in the event that
          federal or trust receipts are greater than
          appropriations.

     As affirmed by the record of votes of the members of your
Committee on Education that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2474, S.D. 1, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 2474, S.D.
1, H.D. 1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Education,



                                   ______________________________
                                   KEN ITO, Chair