STAND. COM. REP. NO. 1359

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.C.R. No. 90
                                        S.D. 1




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

Sir:

     Your Committees on Education and Technology and
Transportation and Intergovernmental Affairs, to which was
referred S.C.R. No. 90 entitled:

     "SENATE CONCURRENT RESOLUTION REQUESTING RELEASE OF ALL
     FEDERAL IMPACT AID FUNDS DIRECTLY TO THE DEPARTMENT OF
     EDUCATION UPON RECEIPT FROM THE FEDERAL GOVERNMENT AND THAT
     THE BUDGET FOR SCHOOL OPERATIONS NOT BE REDUCED BY FEDERAL
     IMPACT AID,"

beg leave to report as follows:

     The purpose of this measure is to request the Governor to
release all Federal Impact Aid funds directly to the Board of
Education and the Department of Education upon receipt from the
Federal government.

     Testimony in support of this measure was submitted by the
Department of Education, the Hawaii State Parent, Teacher, and
Student Association, the parents and students of Radford High
School, and a concerned individual.  The Department of Budget and
Finance submitted comments on this measure.

     Your Committees find that Federal Impact Aid funds are not
deposited to the general fund, and are deposited directly into
Department of Education accounts.  However, any excess Impact Aid
funds received, that were unbudgeted by the Department of
Education, are deposited into the Department's account and an
equal amount of general funds are restricted by the Department of
Budget and Finance.

 
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     This year, due to a miscalculation by the federal Department
of Education, Hawaii will be receiving $16 million in excess
Federal Impact Aid that has not been budgeted by the Department
of Education.  Under current practice, when the Department of
Education receives this money, a corresponding $16 million of
general funds would be restricted.  The Department must then
petition the Governor to release the funds to the Department.

     Your Committees believe that this restriction of general
funds is unfair to the Department of Education.  There is no
doubt that the Department will be able to use both the general
funds and any excess Federal Impact Aid.  Your Committees believe
that Federal Impact Aid should be regarded as supplemental,
unbudgeted funds and that the Department of Education should be
allowed to keep any excess Federal Impact Aid.

     Your Committees have amended this measure to:

     1.   Amend the title to read:
          "REQUESTING RELEASE OF ALL RESTRICTED GENERAL FUNDS DUE
          TO THE BUDGETING TO FEDERAL IMPACT AID RECEIPTS
          DIRECTLY TO THE DEPARTMENT OF EDUCATION AND THAT THE
          BUDGET FOR SCHOOL OPERATIONS NOT BE REDUCED BY FEDERAL
          IMPACT AID";

     2.   Reflect the current process for budgeting for Federal
          Impact Aid; 

     3.   Request that the Governor release all restricted
          general funds due to the budgeting of Federal Impact
          Aid receipts directly to the Board of Education and the
          Department of Education;

     4.   Request that the Federal Impact Aid be regarded as
          supplemental unbudgeted funds and, as such, no general
          funds should be restricted for excess Federal Impact
          Aid that was previously unbudgeted; and

     5.   Request that the Department of Education consider
          utilizing Federal Impact Aid moneys for facilities
          repair and improvement, in addition to supplementing
          teachers' salaries.

     As affirmed by the records of votes of the members of your
Committees on Education and Technology and Transportation and
Intergovernmental Affairs that are attached to this report, your
Committees concur with the intent and purpose of S.C.R. No. 90,
as amended herein, and recommend that it be referred to the

 
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Committee on Ways and Means, in the form attached hereto as
S.C.R. No. 90, S.D. 1.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Education and
                                   Technology and Transportation
                                   and Intergovernmental Affairs,



____________________________       ______________________________
CAL KAWAMOTO, Chair                DAVID Y. IGE, Chair

 
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