‘What you’re asking the board to do is rubber stamp what you present to us, and we’re not doing that’

Hawaiʻi Board of Education Chair Warren Haruki called the potential lapse of $465 million in school construction funds “a huge tragedy” Thursday, adding that he fears state lawmakers have lost confidence in the department.

Last year, the Hawaiʻi State Department of Education identified capital improvement program (CIP) projects, such as the construction of new classrooms, libraries, athletic facilities and more, that were categorized as “high risk” of not being completed with existing funding, or that the department may not be able to contract or allocate funding for before the lapse date of June 30, 2024.

Allowing those funds to lapse could force more than 150 projects already on the books for years to stop and go through the lengthy appropriations process again.

During Thursday’s board Finance and Infrastructure Committee (FIC) meeting, Haruki said, “There’s systemic problems here that we need to, I hate to say this, blow it up and start all over again. We need the support of the Legislature. We need support of the unions. We need support of the counties. We need support of the board. But we need to acknowledge hey, we’re Apollo 13, ‘Houston, we have a problem.’”

Committee chair Ken Kuraya pressed the state schools superintendent and deputy superintendent of operations for key details and better communication, noting that the department’s latest update “was shorter in length and without details expected.”

Kuraya said the department failed to address questions raised at the board committee’s Dec. 7 meeting, including why the department is asking for more CIP and repair and maintenance funding when it isn’t spending all the amounts appropriated.

“This is information that the board needs to be able to support the department as we move ahead,” Kuraya said. “These things need to be addressed. Without that, what you’re asking the board to do is rubber stamp what you present to us, and we’re not doing that.”

The board reviews and approves the department’s budget.

Board chair Haruki said, “I want to just confirm this on the record that back in October, we approved a supplemental budget, and since that time, up until the memo that we just saw, there’s been no formal communication to FIC nor the board with respect to all the changes that have gone (on) and that are outlined in your memo of today.”

“If you just look at the sheer numbers of what we approved in October, the magnitude of the lapsing is 4, 5x of what we approved,” Haruki said.

Thursday’s board committee meeting took place one day after Schools Superintendent Keith Hayashi and Curt Otaguro, HIDOE deputy superintendent of operations, appeared before the state House Committee on Finance for an informational briefing.

In that briefing, Rep. Scott Nishimoto, CIP chair on the House Finance Committee, expressed frustration with the potential inaccuracy of the estimated total in lapsed funds. He asked Otaguro:

Nishimoto: Yesterday, you sent our CIP staff a list of roughly $240 million worth of projects from that $465 (million) that you think you may be able to encumber, correct?

Otaguro: What we did was provided you a list, your aide with a list, of the entire list of $465 (million) with highlighting which projects we believe we may get to, and that’s the challenge. We’re not in charge of permitting. We’re not in charge of certain aspects, but yes, we hope we can get there, and I know that’s putting you personally in a predicament because it’s not a hard number.

Nishimoto: Okay, so the governor’s budget uses the assumption of lapsing $465 (million). Correct?

Otaguro: That’s correct.

Nishimoto: So now you’re saying you may spend some of that $465 (million)?

Otaguro: That is correct.

Nishimoto: Okay, so is the governor’s budget going to be updated?

Otaguro: That is something I could not answer, but I would work with B&F to communicate those projects that we believe could go.

Nishimoto: When would we get that decision? Because right now, what you’re telling me is that the governor’s budget, his CIP budget, it’s brand new basically, because you may spend $200 million more.

Otaguro: We may, yes.

Nishimoto: So when will you be able to tell us?

Otaguro: Based on recent discussions, I need to talk to the B&F director to get a hard date so that we can get this budget finalized.

Nishimoto: To me, the hard date was when you guys gave us a budget. Right? That’s the date we’re going to work off of. That’s the budget we’re going to work off of. Now you’re telling us, that’s not really the CIP budget from the administration. Correct?

Otaguro: That would be my false assumption, yes. I was not under the impression that would be the hard number to work off of, but I understand your perspective of what you’re trying to do in your CIP budgeting.

At Thursday’s board committee meeting, Haruki said, “Let me just say this. Watching that (House Finance Committee) hearing yesterday… I would not call it good. I would say that there was an issue of trust and confidence in the DOE’s ability to get things done.”

Haruki said, “What I’m trying to really ask you is how confident are you that items that you choose to not lapse, how confident is the DOE that those projects can be done on time by the end of this calendar year at the appropriate budget line allocation? Because you have zero project completion funds left. How confident are you of those?”

Otaguro said the department will utilize bright-line rules, a process established last summer that defines objective factors to assess and review each project.

He added, “We cannot act until we at least have a discussion with the Senate.”

“When will you insert the board in this process?” Haruki asked.

“I don’t have an answer to that,” Otaguro replied.

Moving forward, committee chair Kuraya directed the department to provide a comprehensive report (“not a two-page or three page-memo”) of facility responsibilities that explains the CIP situation and how it happened, and outlines both short-term and long-term solutions. He also requested analysis reports for the unspent CIP funds.

Kuraya said, “I know it’s harsh in the sense of maybe calling out individuals of the department, but the needs are there. We need to do this to ensure for the health and safety as well as for the educational needs of students. Facilities need to be updated. Facilities need to be repaired and maintained so that we can be proud of what we have.”

Superintendent Hayashi told board members, “We hear the committee’s concerns in regards to communicating with the board and get your approvals in terms of budgets and giving you updates in terms of where we are throughout the process. But we will definitely do better at that.”

“We hear you also loud and clear on the cost escalations involved,” Hayashi added. “Those are all things that we’re definitely taking into consideration and we will get back to you.”

On Dec, 20, the superintendent admitted to lawmakers that he didn’t know until late November about his own department’s plan to allow $465 million in school construction funds to lapse, bringing more than 150 projects to a halt, even though officials from his department had been working on the proposal since March.

Randall Tanaka, HIDOE’s assistant superintendent for facilities and operations, was fired Dec. 6, sources said, the same day that the news website Honolulu Civil Beat broke the story about the $465 million in lapsed school construction projects. Civil Beat reported that HIDOE facilities and operations branch employees were told Tanaka had been terminated during an internal meeting on Dec. 7.

Later in December, HIDOE appointed Audrey Hidano as Tanaka’s interim replacement.