University of Hawaii.

Authorizes the University of Hawaii to make loans and to carry
over funds from year to year.  (HB833 HD1)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The State Constitution established the
 2 University of Hawaii (university) as a "body corporate."
 3 Recognizing this special status, the legislature has provided the
 4 university with more flexibility in managing its resources than
 5 typical state agencies.
 6      The purpose of this Act is to extend the flexibility of the
 7 university to manage its resources by:
 8      (1)  Authorizing the university to make loans, as any
 9           private corporation is allowed to do, for an aggregate
10           amount of up to $10,000,000; and
11      (2)  Enabling the university to carry over unexpended funds
12           from one fiscal period to the next.  This authority is
13           similar to that currently extended to the department of
14           education.
15      SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended
16 by adding a new section to be appropriately designated and to
17 read as follows:
18      "37-    University of Hawaii; carryover of funds.  (a)  The
19 University of Hawaii may retain any appropriation of general
20 funds for operating purposes at the close of a fiscal year.  The

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 1 funds retained shall not lapse until June 30 of the following
 2 fiscal year.
 3      (b)  Any appropriation retained in accordance with this
 4 section may be used by the university to supplement the
 5 appropriation for any university program.
 6      (c)  The university shall submit a report for each fiscal
 7 year identifying the amount of funds to be carried over for each
 8 appropriation to:
 9      (1)  The director of finance no later than thirty days after
10           the close of the fiscal year for which the report is
11           being made; and
12      (2)  The legislature no later than twenty days prior to the
13           convening of the following regular session of the
14           legislature."
15      SECTION 3.  Chapter 304, Hawaii Revised Statutes, is amended
16 by adding two new sections to be appropriately designated and to
17 read as follows:
18      "304-     University loans.  (a)  The university may from
19 time to time borrow moneys from any financial institution;
20 provided that:
21      (1)  The aggregate amount of loans outstanding at any time
22           shall not exceed $10,000,000;
23      (2)  The period to repay each loan shall not exceed five
24           years; and

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                                     H.B. NO.           H.D. 1

 1      (3)  Each loan agreement shall be subject to the condition
 2           that amounts payable by the university under the loan
 3           agreement shall be limited to the assets of the
 4           university.  In no circumstance shall the university be
 5           obligated to pay amounts due under a loan from any
 6           source other than university assets.
 7      (b)  Loans made by the university pursuant to this section
 8 shall not be obligations for which the full faith and credit of
 9 the State is pledged and shall not constitute "bonds" within the
10 meaning of section 12 of article VII of the Constitution of the
11 State.  No holder of any loan agreement entered into under this
12 section shall have the right to compel any exercise of taxing
13 power of the State to repay the loan or interest on the loan.
14 Each loan agreement issued under this section shall recite in
15 substance that the agreement shall not be an obligation for which
16 the full faith and credit of the State is pledged, and that the
17 holder of the loan agreement shall have no claim or lien on any
18 revenues or other moneys of the State except for assets of the
19 university.
20      (c)  Upon the university's failure to pay or default on a
21 loan, the holder of the loan shall be limited to claims against
22 the assets of the university.

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                                     H.B. NO.           H.D. 1

 1      (d)  The president of the university shall report annually
 2 to the legislature no later than twenty days prior to the
 3 convening of each regular session on all loans outstanding on
 4 June 30 of the previous fiscal year.
 5      304-    University activities revolving fund.  There is
 6 established in the state treasury a revolving fund to be known as
 7 the university activities revolving fund into which shall be
 8 deposited:
 9      (1)  All moneys generated by loans pursuant to section
10           304-   ;
11      (2)  All appropriations made to the fund; and
12      (3)  Interest earned or accrued on moneys deposited in the
13           fund.
14 The fund shall be administered by the board of regents to finance
15 university activities as determined by the board of regents.
16 Revenues generated by these and other activities, as determined
17 by the board of regents, shall be deposited into the fund to
18 repay loans."
19      SECTION 4.  Section 37-32, Hawaii Revised Statutes, is
20 amended to read as follows:
21      "37-32  Quarterly allotment periods.  Except for the use of
22 loans made by the University of Hawaii pursuant to section
23 304-10, and except as provided in [section] sections 37-41.5[,]

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                                     H.B. NO.           H.D. 1

 1 and 37-  , no officer, department, or establishment shall expend
 2 or be allowed to expend during any fiscal year any sum for any
 3 purpose not specifically authorized by the legislature for
 4 expenditure during that particular fiscal year, and not made
 5 available pursuant to the allotment system provided for in
 6 sections 37-31 to 37-41.  For the purposes of the allotment
 7 system, each fiscal year shall be divided into four quarterly
 8 allotment periods, beginning, respectively, on the first days of
 9 July, October, January, and April; provided that in any case
10 where the quarterly allotment period is impracticable, the
11 director of finance may prescribe a different period suited to
12 the circumstances, not exceeding six months nor extending beyond
13 the end of the fiscal year."
14      SECTION 5.  Section 37-41, Hawaii Revised Statutes, is
15 amended to read as follows:
16      "37-41  Appropriations to revert to state treasury;
17 exceptions.  Unless otherwise provided by [section] sections
18 37-41.5, 37-   , or any other law, every appropriation or part
19 thereof of any kind made subject to sections 37-31 to 37-40,
20 remaining unexpended and unencumbered at the close of any fiscal
21 year shall lapse and be returned to the general fund in the
22 manner prescribed in section 40-66."

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                                     H.B. NO.           H.D. 1

 1      SECTION 6.  Section 37-42, Hawaii Revised Statutes, is
 2 amended to read as follows:
 3      "37-42  Allotment as limit of expenditures; liability for
 4 excessive expenditure.  [No] Except for the University of Hawaii,
 5 no department or establishment shall expend or be allowed to
 6 expend any sum, or incur or be allowed to incur any obligation in
 7 excess of an allotment.  No obligation incurred in excess of the
 8 balance of an allotment shall be binding against the State, but
 9 where the obligation is violative only for having been made in
10 excess of an allotment, the director of finance may authorize
11 payment thereof from unallotted funds.  Any officer, employee, or
12 member of any department or establishment, who makes or causes to
13 be made any excessive expenditure or incurs or causes to be
14 incurred any excessive obligation shall be deemed guilty of
15 neglect of official duty and shall be subject to removal from
16 office and shall be liable to the State for such sum as may have
17 been expended or paid, and such sum, together with interest and
18 costs, shall be recoverable in an action instituted by the
19 attorney general.
20      [Provided that any] Any state department, with the prior
21 consent of the governor and of the director, and subject to terms
22 and conditions insuring protection of the State as shall be
23 imposed by the department, may cosponsor a project with another

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 1 state department or with [the] a county or any county agency
 2 [thereof,] for the purpose of applying for federal funds or
 3 assistance for any project, after certification by the state
 4 comptroller that proper and sufficient allotment has been made by
 5 the governor to the other department or after receipt of
 6 resolution adopted by the county council that proper and
 7 sufficient sums for the project have been appropriated and
 8 encumbered."
 9      SECTION 7.  Statutory material to be repealed is bracketed.
10 New statutory material is underscored.
11      SECTION 8.  This Act shall take effect on July 1, 1999, and
12 shall be repealed on June 30, 2001; provided that sections 37-32,
13 37-41, and 37-42, Hawaii Revised Statutes, are reenacted in the
14 form in which they read on June 30, 1999.