2026-0734 SB895 SD1 SMA.

SECTION 1. The legislature finds that capital improvement project appropriations and facilities planning within the department of education directly affect the delivery, continuity, and quality of educational services. Delays, prolonged encumbrances, underutilization, or lack of transparency in capital improvement project implementation may impair operational effectiveness and public trust. The legislature further finds that transparency alone is insufficient if the department of education lacks the technical capacity to execute its projects and keep satisfactory records. Heat Abatement, Report No. 25-09 from the Office of the Auditor, published August 2025, revealed systemic operational failures, noting that the department of education prioritized speed over planning, ignored professional engineering advice, and failed to account for long-term maintenance costs. Enhanced reporting and accountability measures are therefore necessary to ensure the efficient and effective stewardship of public funds and to promote timely completion of education-related infrastructure projects.

The legislature further finds that a significant cause of these failures is the department of education's inability to recruit and retain qualified technical professionals. The legislature notes that existing law authorizes the school facilities authority to hire qualified staff exempt from civil service requirements at competitive market rates, allowing for greater agility and technical competence.

Accordingly, the purpose of this Act is to strengthen the reliability, flexibility, safety, and fiscal accountability of public education service delivery by:

(1) Requiring the department of education to submit annual reports to the legislature outlining specified information concerning capital improvement projects and facilities and post the reports to its website in a searchable format;

(2) Requiring that any capital improvement project funds encumbered for more than five years without commencement of construction be specifically identified and justified or be subject to legislative review for potential reversion or reassignment; and

(3) Authorizing the superintendent of education to appoint and set the salaries of certain positions within the office of facilities and operations to provide the department with internal expertise, prevent future project failures, and effectively manage the backlog of school repairs.

SECTION 2. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to part IV, subpart B, to be appropriately designated and to read as follows:

"§302A- Capital improvement projects; facilities; annual reports. (a) The department shall submit an annual capital improvement project report to the legislature no later than thirty days prior to the convening of each regular session.

(b) The reports required in subsection (a) shall include, for each capital improvement project with appropriated or encumbered funds:

(1) The project title and location;

(2) Year or years of the appropriation and total amount appropriated;

(3) Amount encumbered and amount expended;

(4) Project phase (planning, design, procurement, construction, or completed);

(5) Original and current estimated completion dates;

(6) Explanation for any delay exceeding twenty-four months from the appropriation date for the project;

(7) Cost overruns, change orders, and re-appropriations requested or received;

(8) Name and title of the responsible project manager;

(9) Status of the project, including protests or redesigns; and

(10) Whether the project is on time and within budget.

(1) Total deferred maintenance backlog and year-over-year change;

(2) Number of licensed technical staff assigned to facilities management;

(3) Number of vacant facilities-related positions; and

(4) Total reliance on consultants, by dollar amount.

(d) The report and all information required by this section shall be posted annually on the department's website in a searchable format.

(e) Any capital improvement project funds encumbered for more than five years without commencement of construction shall be specifically identified and justified, or shall be subject to legislative review for reversion or reassignment."

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

"§302A- Office of facilities and operations; technical staff; pilot program. (a) Notwithstanding any other law to the contrary, the superintendent may redesignate and convert any existing position within the office of facilities and operations that is funded but vacant to be exempt from chapter 76 for the purpose of hiring qualified technical professionals; provided that:

(1) The total number of full-time equivalent positions within the office of facilities and operations shall not increase;

(2) The number of exempt positions established pursuant to this section shall not exceed twenty at any one time;

(3) The superintendent shall utilize existing vacant position counts to establish the exempt positions;

(4) The exemption shall apply exclusively to individuals with specialized expertise in the following areas:

(A) Construction project management; provided further that consultants for construction project management shall not be eligible for exempt positions established pursuant to this section;

(B) Construction inspection;

(D) Recordkeeping for all capital improvement projects; and

(5) Before the appointment of any exempt position under this section, the superintendent shall submit a plan to the board and legislature identifying the proposed organizational structure and specific digital project management system the office of facilities and operations will implement to track project status in real-time.

(b) The superintendent may fix the compensation for positions redesignated and converted to positions exempt from chapter 76 under this section at rates comparable to prevailing market rates.

(c) The department shall submit an annual report to the legislature no later than thirty days prior to the convening of each regular session, including:

(1) Specific vacant positions that were redesignated as exempt under this section;

(2) Deliverables achieved by newly appointed exempt professionals; and

(3) The impact of exempt appointments made pursuant to this section on the efficiency of facility repair and maintenance projects."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2026; provided that section 3 shall be repealed on June 30, 2031.

THE SENATE	S.B. NO.	896
THIRTY-THIRD LEGISLATURE, 2025		S.D. 1
STATE OF HAWAII		Proposed