SB815 SD1

SECTION 1. The legislature finds that in the United States, the federal government leaves to the individual states the kuleana of providing funding for public education and ensuring that the related educational financing systems are founded on sound governance principles. Article X, section 1 of the Hawaii State Constitution further provides for the "establishment, support and control of a statewide system of public schools ... including physical facilities therefor." Education appropriations for the K-12 public school system account for roughly twenty per cent of the entire state budget, reflecting the uniquely important regard Hawaii's people have for the State's educational system.

The department of education is the only single statewide educational district in the United States. Serving roughly one hundred eighty thousand students, the department provides much more than classroom instruction but also non-instructional services that benefit communities throughout the State. These non-instructional services include food services, homeless liaison services, mental and behavioral health services, emergency shelter during natural disasters, and access to broadband and internet infrastructure. Together with the instructional services, the department serves as a tremendous safety net for a significant number of Hawaii families.

The year 2020 was largely characterized by the onset of the coronavirus disease 2019 (COVID-19) pandemic and its decimation of the economies across the globe. Similarly, the State faces a dire fiscal challenge with drastic cuts to the state budget and virtually every government service it provides, including education. The threat of decreased funding for K-12 public education reduces both access to learning and the preservation of critical safety nets for a significant number of students, particularly the department's most vulnerable learners and their families.

A vibrant K-12 public education system enables the fulfillment of educational goals and aspirations far beyond a student's successful completion of secondary education requirements. Stability and predictability in the department's funding are critical and requisite components in maintaining its capacity to meet constantly evolving learning needs and the ability to design appropriate learning and support systems for haumana and their ohana.

The legislature further finds that it must build on the foundation established by the weighted student formula of ensuring equity in access to educational opportunities for all students. It is also incumbent on the legislature to promote predictability and stability of K-12 education revenues by committing a base of annual funding in the face of changing circumstances to ensure the continuous and uninterrupted equitable distribution of educational resources for all public school students.

The purpose of this Act is to;

(1) Establish maintenance of effort provisions;

(2) Establish a public education stabilization trust fund;

(3) Require reports; and

(4) Make appropriations.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Public education stabilization trust fund; remittances. The sum from all general excise tax revenues realized by the State that represents the difference between state appropriations to the department of education for the direct funding sources for the provision of free public education from the preceding fiscal year and the current fiscal year in which a deficit occurs shall be deposited to the credit of the public education stabilization trust fund."

SECTION 3. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new subpart to part V to be appropriately designated and to read as follows:

" . Maintenance of Effort

§302A- Definitions. As used in this subpart, unless the context otherwise requires, "preceding fiscal year" means the state fiscal year, or the twelve-month fiscal period most commonly used for official reporting purposes, prior to the beginning of the state fiscal year in which funds are available for obligation by the department.

§302A- Maintenance of effort; appropriations. (a) The state appropriations to the department for the provision of free education for the current fiscal year shall not be less than state appropriations to the department for the preceding fiscal year.

(b) If state appropriations to the department for the current fiscal year are less than the preceding fiscal year, then the aggregate proportion of the department's annual appropriations from the state general funds over the preceding ten years shall be maintained as the appropriation to the department.

(c) If state appropriations to the department for the current fiscal year are less than the preceding fiscal year, the difference between the preceding fiscal year appropriation and the current fiscal year appropriation shall be deposited to the credit of the public education stabilization trust fund.

§302A- Maintenance of effort; temporary suspension. (a) Upon a declaration by the governor concurred to by the legislature, the maintenance of effort provisions pursuant to this chapter may be temporarily suspended for any of the following reasons:

(1) A precipitous decline in the general fund revenue of the State as declared in an emergency proclamation by the governor;

(2) Exceptional or uncontrollable circumstances, such as a natural disaster; or

(3) The total enrollment of students attending department schools falls below ten per cent of the average official enrollment counts over the current and preceding three school years.

(b) The suspension shall last until the legislature, with the approval of the governor, determines that the maintenance of effort provisions shall be reinstated. The suspension shall automatically terminate no later than the start of the new biennial period following the temporary suspension."

SECTION 4. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to part V to be appropriately designated and to read as follows:

"§302A- Public education stabilization trust fund; established. (a) There is established within the state treasury a trust fund to be known as the public education stabilization trust fund into which shall be deposited:

(1) All moneys transferred pursuant to section 237- for the provision of free public education;

(2) Any other appropriations by the legislature to the trust fund; and

(3) Income and capital gains earned by the trust fund.

(b) The public education stabilization trust fund shall be administered by the department and used to compensate for any reductions in general fund appropriations for direct school funding programs in the state budget from the preceding fiscal year to the current fiscal year; provided that public charter school programs shall be compensated to the same extent as public school programs.

(c) The department shall submit to the director of finance a report that shall be prepared in the form described by the director of finance and shall identify the total amount of funds that will carry over to the next fiscal year. The department shall submit the report to the director of finance within ninety days of the close of each fiscal year and a copy of the information contained in the report to the director of finance shall be included within the agency's report to the legislature."

SECTION 5. The department of budget and finance shall submit to the legislature no later than twenty days prior to the convening of the regular session of 2022 a report on the general excise tax revenues diverted from the general fund to the public education stabilization trust fund and the impact that diversion had on other state departments and operations.

SECTION 6. The department of budget and finance shall approve a report that shall be prepared by the department of education regarding the amount of money spent from the public education stabilization trust fund, which shall be submitted to the legislature no later than twenty days prior to the convening of the regular session of 2022.

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2021-2022 to be deposited into the public education stabilization trust fund established pursuant to section 4 of this Act.

SECTION 8. There is appropriated out of the public education stabilization trust fund the sum of $ or so much thereof as may be necessary for fiscal year 2021-2022 and the same sum or so much thereof as may be necessary for fiscal year 2022-2023 for the maintenance of effort for K-12 educational programs as required by section 3 of this Act.

The sums appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 9. New statutory material is underscored.

SECTION 10. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	815
THIRTY-FIRST LEGISLATURE, 2021		S.D. 1
STATE OF HAWAII