STAND. COM. REP. NO. 146

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 536
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Education and Technology, to which was
referred S.B. No. 536 entitled: 

     "A BILL FOR AN ACT RELATING TO COMPUTER AND COMMUNICATION
     SYSTEMS,"

begs leave to report as follows:

     The purpose of this measure is to allow state agency heads
to purchase computer and communication systems with proceeds from
the sale of general obligation bonds.

     Your Committee received testimony in support of this measure
from the Department of Education.  The Department of Budget and
Finance (DB&F) testified in opposition.

     Your Committee finds that while public schools statewide
have enjoyed recent support from E-rate and federal technology
funding, the student computer ratio is still at ten to one.  It
is critical that the hardware in schools be kept current and
powerful enough to engage students in projects that encourage
skill development well beyond word processing, spreadsheets, and
data bases.

     Your Committee has heard the concerns of the DB&F that
general obligation bonds are long-term debt used to finance
capital improvements that have a life at least equal to the term
of the debt incurred.  In response, your Committee would note
that article VII, section 13, of the Hawaii State Constitution,
states:

 
a                                                     SB536 SD1
                                   STAND. COM. REP. NO. 146
                                   Page 2


     "All general obligation bonds for a term exceeding two
     years shall be in serial form maturing in substantially
     equal installments of principal, or maturing in
     substantially equal installments of both principal and
     interest." 

     Your Committee understands this to mean that general
obligation bonds need not be for long-term debt, and it is the
intent of the Legislature that for the purposes of this measure,
those general obligation bonds issued for the purchase of
computer and communications systems be for shorter terms of three
to ten years.

     Your Committee has amended this measure to require that the
director of finance consider shorter term general obligation
bonds for the purposes of this measure.

     Your Committee is gravely concerned that Hawaii continues to
rank as one of the lowest states in the deployment and use of
information technology.  If the State is serious about addressing
Hawaii's stagnant economy, then it must explore all options for
upgrading and expanding a woefully inadequate telecommunications
infrastructure.  Other states have found general obligation bonds
for information technology a worthwhile investment in both
current operations and future endeavors.

     As affirmed by the record of votes of the members of your
Committee on Education and Technology that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 536, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 536,
S.D. 1, and be referred to the Committee on Ways and Means.

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



                                   ______________________________
                                   DAVID Y. IGE, Chair

 
a                                                     SB536 SD1