Governor Rejects Plan to Reduce School Furloughs
January 06, 2010

Statement from Wil Okabe:
"When the employer group presents the HSTA with a new proposal, we will review it and respond to the terms it contains."

BOE CHAIR'S STATEMENT ON GOVERNOR'S REJECTION OF PLAN TO REDUCE SCHOOL FURLOUGHS

HONOLULU -- Hawaii State Board of Education Chairman Garrett Toguchi issued the following statement today regarding negotiations to reduce the number of public school furloughs:

I'm disappointed that Governor Lingle and her advisers have rejected a supplemental agreement by the Board of Education, the Department of Education, and the Hawaii State Teachers Association (HSTA) to reduce the number of public school furloughs. After hours of sharing information and answering questions, it was confirmed today that the Governor will not support the current agreement.

The Board, the Education Department and the HSTA offered a reasonable agreement that would have eliminated furlough Fridays this school year. The plan would have restored five furlough days with $35 million from the Rainy Day fund, converted two teacher planning days into instructional days, and ended the school year three days earlier to minimize disruptions to students and parents. The agreement also would have increased Hawaii’s chances of winning some $75 million in federal Race to the Top grants. One key criteria of the program, whose application is due Jan. 19, requires states to make education funding a priority.

The current agreement is fiscally responsible, and a viable solution that puts students' interests first.

While this is a devastating setback for public education, the Governor's staff willingness to meet again and devise a new proposal is encouraging. However, given the urgency of the matter, it is imperative that we come up with a workable proposal that gets students back to school before time runs out.

Gov. Linda Lingle's administration this afternoon rejected a tentative agreement between the state Department of Education and the Hawaii State Teachers Association to end furloughs for the current school year.

Linda Smith, the governor's senior policy adviser, said the state administration will continue to work with education officials this week to craft a "revamped" proposal to present to the teachers union. She was not specific what might be different in the new proposal, but she did say the governor hoped to address not only the remaining 10 furlough days in the current school year, but the 17 furlough Fridays in next year's school calendar, as well.

Smith said they hoped to have an agreement with the HSTA prior to the next furlough Friday scheduled for Jan. 15.

Board of Education Chairman Garrett Toguchi called the rejection "a devastating setback."

"While this is a devastating setback for public education, the governor's staff's willingness to meet again and devise a new proposal is encouraging. However, given the urgency of the matter, it is imperative that we come up with a workable proposal that gets students back to school before time runs out," he said.

Lingle's staff met with education officials and Toguchi for nearly two hours this morning at the state Department of Education building on Miller Street. Marie Laderta, director of the state Department of Human Resources Development, and Georgina Kawamura, director of the state Department of Budget and Finance, also attended the meeting.

On Dec. 28, the DOE announced it had reached a tentative agreement with the teachers union to effectively eliminate furlough Fridays for the current school year. The agreement did not deal with next school year.

Under the agreement, $35 million from the state rainy day fund would restore five furlough days. Under that plan, teacher planning days on Jan. 4 and May 27 would be converted to teaching days, restoring two more classroom days for students. The school year for students would end three days early on May 21, leaving the week beginning May 24 as a furlough week for teachers.

Thus, seven of the 10 remaining furlough days for the 2009-2010 school year would be restored. But by moving the remaining three furlough days to the end of the year, furlough Fridays would have been eliminated.

Toguchi said education officials were told during the meeting that the tentative agreement that had been reached with HSTA is effectively dead.

Smith said additional meetings may be held as early as tomorrow with the BOE and DOE negotiating teams, lead by BOE members John Penebacker and Janis Akuna.

"It (the previous agreement) is a foundation that we hope to build on, make it more holistic and apply to not only this school year but next school year," Smith said.

Gov. Linda Lingle's budget plan for the upcoming legislative session amounts to passing the buck and relying on future administrations to solve the state's financial woes, a key state lawmaker said.

"This lame-duck administration is basically kicking the can down the road," said Rep. Marcus Oshiro, chairman of the House Finance Committee. "They are not making any decisions on prioritizing government services."

Oshiro (D, Wahiawa-Poamoho) spoke yesterday after a briefing by Budget Director Georgina Kawamura on the administration's supplemental budget proposal that aims to close a $1.23 billion deficit over the next two fiscal years.

Among other means for making up the deficit for the 2010 fiscal year that ends June 30, Lingle has proposed delaying payment on several items, including income tax refunds, which would give the state an estimated $275 million.

Delaying the tax refunds does not require legislative approval, but it would leave a hole for the next administration to fill after Lingle leaves office this year.

"That's a one-shot deal, but a prominent component of her getting out of this current fiscal year," Oshiro said. "The question is, Do you continue that policy?"

Kawamura said if lawmakers disagree with the administration's plan, that is their prerogative.

"I guess he's entitled to his thoughts of how we're handling it, but I think we've proposed a reasonable financial plan and budget for them to consider," Kawamura said. "Their responsibility in this process is they agree, or they disagree and they find the alternative means to provide the balanced budget and financial plan."

Lawmakers and the administration debated the best way to achieve that balance in such difficult economic times, with the most realistic options being tax hikes or steeper program cuts.

But targeting program cuts to help core services — which most agreed were education, human services and public safety — can have negative impacts, as well.

"When we propose to take money from a smaller department to give to a larger department, that hit to the smaller department is tremendous for them," Kawamura said. "To get $1 million out of Agriculture — that's a big hit when we want to give $1 million to Health and Human Services."

The budget director's testimony comes as the Legislature's money committees hear from all state agencies on their budget wishes for the upcoming session. Hearings continue until the start of the regular session Jan. 20.

Meanwhile yesterday, the money committees also heard from the state Council of Revenues on its forecast for the upcoming year.

Economists had encouraging comments for lawmakers, predicting that the recession for Hawaii seems to have bottomed out, and the economy should start showing signs of recovery with tourism coming back and rebounds in construction and housing.

But the recovery would be slow, they said.

"That's good news," Oshiro said. "Maybe the slide has stopped and the recovery, though being slow, is on its way."

Economists cautioned that the forecast always faces risks and that the current forecast of a 2.5 percent decline in revenue for the 2010 fiscal year could easily be wrong by up to 2 percentage points either way. Each percentage point equates to about $45 million in revenue.

"Even with the best model, you're not going to predict an event like a 9/11," said council Chairman Paul Brewbaker. "You need to be attentive to the ongoing presence of risks that just, out of the blue, could throw the plan off track."

Several state lawmakers and a leading economist yesterday questioned why the Lingle administration mostly used across-the-board spending cuts to contain the state's budget deficit, arguing that it led to misguided decisions such as furloughs for public school teachers on classroom days.

The Lingle administration imposed nearly 14 percent budget restrictions on many state departments this fiscal year, giving each department a target and generally allowing department directors to choose how to make the cuts.

At an informational briefing on the state budget before the state Senate Ways and Means Committee and the state House Finance Committee, state Rep. Marcus Oshiro, D-39th (Wahiawa), the chairman of the House Finance Committee, said the lack of priorities was disappointing.

Carl Bonham, a University of Hawai'i-Manoa economist who serves on the state Council on Revenues, called it disturbing and said public education should have been a priority .

"It's a Band-Aid," Bonham said. "The question is where should we be doing the cutting?"

Georgina Kawamura, the state's budget director, invited critics to come up with their own suggestions on where to cut.

"With due respect to Carl Bonham, I wish he would have told us what targeted programs to eliminate," she said.

Kawamura said each state department and program has a constituency. "No matter what you touch, someone will be here saying that we shouldn't cut that," she said. "It's not an easy decision to make."

The state Department of Education chose teacher furloughs on classroom days to help meet the budget restriction, an alternative to layoffs or deeper school program cuts. Teacher furloughs are included in a new two-year contract with the Hawaii State Teachers Association, but the governor, educators and the teachers union are in negotiations to reduce the number of furlough days after public backlash.
'Paramount' Priority

Yesterday's briefing was the first of several in advance of this year's session of the state Legislature that opens later this month. Gov. Linda Lingle has proposed closing the state's $1.2 billion budget deficit through June 2011 with a combination of spending cuts and tax measures, including delaying state tax refunds from April to July and scooping up hotel-room tax revenues that now go to the counties.

Kawamura said closing the gap and achieving a balanced budget is the administration's priority.

"This is our paramount responsibility and overriding concern in the current fiscal biennium," she said.

The state is approaching the second year of a two-year budget cycle. Lingle is taking executive action, such as delaying the tax refunds, to get through the fiscal year that ends in June.

The governor has proposed a supplemental budget to lawmakers for next fiscal year.

Economists from the Council on Revenues told lawmakers that the state is in a slow recovery from the recession. But they cautioned that the council's current forecast — a 2.5 percent drop in tax collections this fiscal year — could underestimate the revenue decline, so they urged lawmakers to take a conservative approach to the budget.
Forecasts Wrong

The council's forecasts, by law, are used by lawmakers and Lingle when preparing the budget. The forecasts, however, consistently miss-ed the extent of revenue growth during surplus years and have not accurately tracked the steep decline during the recession.

Paul Brewbaker, the council's chairman, acknowledged that the forecasts have been off substantially. But he said no economist predicted the global financial collapse that led to the recession.

"Everybody was catching up," he said. "Nobody got this right."

State Sen. Donna Mercado Kim, D-14th (Halawa, Mo-analua, Kamehameha Heights), the chairwoman of the Senate Ways and Means Committee, said lawmakers had significant concerns about the accuracy of the forecasts last year, but the council continued to miss the true revenue decline.

"We were all telling you guys, 'We don't think that you guys have gone low enough,' " she said.

Brewbaker and Bonham said the forecasts are not meant to be exact, but are the best estimates based on a range of economists' predictions.

Oshiro told reporters after the briefing that he was disappointed the Lingle administration appeared to be deferring major budget decisions involving state worker health and retirement benefits, Medicaid and even the delay in tax refunds, which will count toward the budget next fiscal year.

Lawmakers are also worried about how to plan for the so-called funding "cliff" when nearly $1 billion in federal stimulus money runs out in 2011.

Lingle is in the final year of her second four-year term as governor. She has said that her budget and financial plan positions the state for economic recovery, but Oshiro disagrees.

"This lame-duck administration is basically kicking the can down the road," he said.