REPORT TITLE:
School-Based Budgeting


DESCRIPTION:
Amends chapters 37 and 302A, HRS, to facilitate implementation of
school-based budgeting.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO SCHOOL-BASED BUDGETING.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  In 1994 the legislature approved Act 272, its
 
 2 landmark legislation to begin the systemic reform of public
 
 3 education in Hawaii.  The intent of that Act was to give
 
 4 individual schools flexibility and autonomy, empowering them to
 
 5 be directly accountable for student achievement and to "put
 
 6 students first".
 
 7      In Act 272, the legislature declared that "...under the
 
 8 current structure, the division of funds among the schools has
 
 9 been an administrative process, outside of public view and beyond
 
10 public control.  Funds are dissipated in a burgeoning
 
11 administrative bureaucracy, and there is no clear accounting of
 
12 how much money actually reaches the schools for instruction and
 
13 activities that directly affect students and learning."
 
14 Accordingly, Act 272 directed the department of education to
 
15 implement school-based budget flexibility for the schools
 
16 beginning with the 1995-1997 fiscal biennium.  "School-based
 
17 budget flexibility" is an operating budget preparation and
 
18 allocation process that provides maximum flexibility to
 
19 individual schools in the preparation and execution of their
 

 
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 1 operating budgets.  Despite the statutory mandate, school-based
 
 2 budgeting has not yet been implemented.
 
 3      The legislature further finds that education reform was one
 
 4 of the major issues for the 1997 economic revitalization task
 
 5 force, which brought forth a number of recommendations for
 
 6 educational change.  One of those recommendations builds upon on
 
 7 the foundation set by Act 272 -- the immediate implementation of
 
 8 school-based budgeting.  Like the legislature, the task force
 
 9 recognized that without it, individual schools cannot achieve the
 
10 flexibility and autonomy necessary to determine the curriculum
 
11 and instructional needs of their students and be directly
 
12 accountable for student achievement.
 
13      The implementation of school-based budgeting has been a goal
 
14 of the legislature for several years.  The governor and
 
15 representatives from the department of education had objections
 
16 to the July 1, 1998, start date imposed by a similar bill passed
 
17 in 1998.  The legislature understands that time is needed for the
 
18 department of education to coordinate its implementation efforts,
 
19 as school principals have previously never prepared budgets as
 
20 contemplated by this Act and need sufficient training to do so.
 
21 By mandating school-based budgeting to begin with the fiscal
 
22 biennium 2001-2003, the legislature allows the department of
 
23 education two years to prepare for the implementation of school-
 

 
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 1 based budgeting.
 
 2      The purpose of this Act is to provide additional guidelines
 
 3 to ensure the implementation of school-based budgeting beginning
 
 4 with the fiscal biennium 2001-2003.
 
 5      SECTION 2.  Chapter 302A, Hawaii Revised Statutes, is
 
 6 amended by adding a new section to be appropriately designated
 
 7 and to read as follows:
 
 8      "§302A-     School-by-school budgeting.  (a)  For the
 
 9 purposes of this section, "school-by-school budgeting" means a
 
10 process in which schools are given maximum flexibility in the
 
11 preparation and execution of their budget.
 
12      (b)  Each public school shall engage in school-by-school
 
13 budgeting.  Participation in school-by-school budgeting shall be
 
14 mandatory for all schools.  Beginning with the budget preparation
 
15 for the 2001-2002 school year, each school shall prepare its
 
16 budget with the assistance of the department.  Each school shall
 
17 be allowed full discretion over the funds designated as school
 
18 lump sum.  Each school shall also be informed of the degree of
 
19 discretion allowed over other types of funding, and shall
 
20 formulate its budget to achieve instructional program goals.
 
21      (c)  The department, through either the state or district
 
22 offices, shall provide appropriate training and technical
 
23 assistance to schools in budget preparation and execution, and
 

 
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 1 ensure that school budgets are in compliance with federal and
 
 2 state law, and the statewide education policy as set forth by the
 
 3 board.
 
 4      (d)  The department shall provide reports from the state and
 
 5 district offices to the schools.  Reports relevant to budget
 
 6 preparation shall be provided no later than one month prior to
 
 7 the required date for a school's budget submission.  Reports
 
 8 relevant to budget execution shall be provided no later than one
 
 9 month prior to the start of each new school year.  Reports for
 
10 budget preparation shall include:
 
11      (1)  Statewide legislative, executive, and board actions on
 
12           the education budget;
 
13      (2)  A summary of guidelines provided by the governor in the
 
14           preparation of the budget;
 
15      (3)  Guidelines established by the department and the board
 
16           for school budget preparation;
 
17      (4)  The school's total budget ceiling with documentation of
 
18           adjustments to the level of funding as compared with
 
19           previous years;
 
20      (5)  Budget ceilings for all cost elements;
 
21      (6)  Explanations of criteria for staffing and funding for
 
22           the school; and
 
23      (7)  Other information as necessary for efficient and
 

 
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 1           effective budget formulation.
 
 2      (e)  Reporting requirements for budget execution shall
 
 3 include:
 
 4      (1)  Statewide legislative, executive, and board actions on
 
 5           the department budget;
 
 6      (2)  Restrictions by the executive, and application of these
 
 7           restrictions by the department by program ID, level IV
 
 8           and level V program, and cost element;
 
 9      (3)  Reserves held by the state and district offices, along
 
10           with the rationale and parameters of expenditure for
 
11           the reserves;
 
12      (4)  Descriptions of each type of allocation along with the
 
13           degree of budget flexibility that accompanies each
 
14           allocation;
 
15      (5)  Full explanations of the budget approval and appeal
 
16           process along with timetables relevant to the
 
17           processes; and
 
18      (6)  Other information necessary to provide the school with
 
19           an understanding of budget execution decisions,
 
20           policies, and procedures.
 
21      (f)  Prior to the beginning of each school year, schools
 
22 participating in school-by-school budgeting shall prepare
 
23 expenditure reports for the previous fiscal year that include:
 

 
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 1      (1)  Expenditures by each allocation type listed by cost
 
 2           element and means of financing;
 
 3      (2)  Variances between expenditures and the budget submitted
 
 4           for that fiscal year by allocation type, cost element,
 
 5           and means of financing;
 
 6      (3)  Funds carried over from the prior fiscal year by
 
 7           allocation type and means of financing;
 
 8      (4)  Areas of budget shortfall and surplus; and
 
 9      (5)  Other information that provides an understanding of
 
10           school level budget actions.
 
11 The reports listed in subsections (d), (e), and (f) shall be made
 
12 available to any interested party upon request.  Schools shall
 
13 provide adequate notification to administrators, teachers,
 
14 parents, and other school level personnel that these reports are
 
15 available for review."
 
16      SECTION 3.  Section 37-34.5, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "§37-34.5  Department of education; allotment and
 
19 expenditure plan; updates.  The department of education shall
 
20 submit an annual allotment and expenditure plan[, including] that
 
21 specifically identifies the amount the department will allocate
 
22 for school lump sum funding.  The plan shall include a separate
 
23 description of all existing financing agreements of the
 

 
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 1 department of education that require funding, together with a
 
 2 statement of the amount of funding required, and all proposed
 
 3 financing agreements of the department of education for the
 
 4 ensuing fiscal year[,].  The plan shall be submited to the
 
 5 governor for each fiscal year.  The governor may require the
 
 6 department of education to submit an update of the expenditure
 
 7 plan based on changing economic conditions."
 
 8      SECTION 4.  Statutory material to be repealed is bracketed.
 
 9 New statutory material is underscored.
 
10      SECTION 5.  This Act shall take effect upon its approval.