STAND. COM. REP. NO. 1499-26

Honolulu, Hawaii

, 2026

RE: S.B. No. 2602

S.D. 1

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

Your Committee on Higher Education, to which was referred S.B. No. 2602, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE GENERAL FUND,"

begs leave to report as follows:

The purpose of this measure is to require that any excess funds in the University of Hawaii Tuition and Fees Special Fund at the end of each fiscal year lapse to the credit of the general fund.

Your Committee received testimony in opposition to this measure from the University of Hawaiʻi System.

Your Committee finds that the funds that comprise the University of Hawaii Tuition and Fee Special Fund are paid by University of Hawaii students and their families with the expectation that those funds will be dedicated to supporting their education, maintaining campus facilities, and funding student services. Your Committee notes that as currently drafted, this measure does not contemplate a one-time sweep of funds into the general fund but constitutes an ongoing situation that may hinder the University of Hawaii's ability to fulfill its mission and obligation to its students. Your Committee believes while the University does need to spend down funds from the University of Hawaii Tuition and Fee Special Fund (Special Fund), a measured approach should be taken to address this issue.

As such, your Committee has amended this measure by:

(1) Inserting language requiring monies in the Special Fund to be allocated and expended for the benefit of students at the campus where the tuitions and fees were paid;

(2) Requiring any unencumbered funds in excess of two months of operating expenses, which are calculated as sixteen percent of the average general operating expenditures over the three prior fiscal years, in the Special Fund to lapse to the general fund beginning June 30, 2029, rather than lapsing all unencumbered funds in the Special Fund at the end of each fiscal year;

(3) Requiring the University of Hawaii to submit a report to the Legislature on the proposed spend down of monies in the Special Fund;

(4) Changing the effective date to July 1, 3000, to encourage further discussion; and

(5) Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Higher Education that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2602, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2602, S.D. 1, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Higher Education,

____________________________

ANDREW TAKUYA GARRETT, Chair