REPORT TITLE:
School-Based Budgeting


DESCRIPTION:
Amends chapter 302A, HRS, to facilitate implementation of school-
based budgeting, by requiring the DOE to submit to the individual
schools and the legislature, by opening day of each regular
session, a report on its proposed school-by-school budget
allocation.  Gives each school maximum flexibility in expending
its allocated budget.  (SB46 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 1999                                H.D. 1
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,
 
 2 Session Laws of Hawaii 1994 (Act 272), its landmark legislation
 
 3 to begin the systemic reform of public education in Hawaii.  The
 
 4 intent of that Act was to give individual schools flexibility and
 
 5 autonomy, empowering them to be directly accountable for student
 
 6 achievement and to "put students first."
 
 7      In Act 272, the legislature declared that "...[u]nder this
 
 8 structure, the division of funds among the schools has been an
 
 9 administrative process, outside of public view and beyond public
 
10 control.  Funds are dissipated in a burgeoning administrative
 
11 bureaucracy, and there is no clear accounting of how much money
 
12 actually reaches the schools for instruction and activities that
 
13 directly affect students and learning."  Accordingly, Act 272
 
14 directed the department of education to implement school-based
 
15 budget flexibility, using an operating process that provides
 
16 maximum flexibility to individual schools in the preparation and
 
17 execution of their operating budgets.
 
18      Currently, lump-sum budgeting allows the department of
 
19 education to allocate funds on a school-by-school basis and gives
 

 
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 1 the schools some flexibility in expending these funds.  However,
 
 2 the legislature further finds that the schools have difficulty in
 
 3 exercising this flexibility in expenditures because the schools
 
 4 are not provided with their budget allocations in a timely
 
 5 manner.  Schools are not made aware of their specific budget
 
 6 allocations until August, well after the department of
 
 7 education's budget has been finalized by the legislature, and
 
 8 only weeks before the school year commences.  By then, the
 
 9 schools do not have the time to exercise their flexibility and
 
10 determine preferred expenditure options.  By giving the schools
 
11 earlier knowledge of the department of education's proposed
 
12 school-by-school allocation, each school will have more time to
 
13 make expenditure decisions that will more effectively utilize the
 
14 moneys allocated by the department.
 
15      The purpose of this Act is to require the department of
 
16 education to provide the schools and the legislature, by the
 
17 opening day of each regular legislative session, reports on its
 
18 proposed school-by-school budget allocation.  This Act will also
 
19 give each school maximum flexibility in the expenditure of its
 
20 allocation.  
 
21      SECTION 2.  Chapter 302A, Hawaii Revised Statutes, is
 
22 amended by adding a new section to be appropriately designated
 
23 and to read as follows:
 

 
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 1      "302A-     School-by-school budgeting.  (a)  For the
 
 2 purposes of this section, "school-by-school budgeting" means a
 
 3 process in which the department of education prepares a separate
 
 4 budget for each school, and each school is given maximum
 
 5 flexibility in the execution of its budget.
 
 6      (b)  Beginning with the budget preparation for fiscal
 
 7 biennium 2001-2003, the department shall prepare, and report to
 
 8 the individual schools and the legislature, a budget for each
 
 9 school based on the budget submitted to the legislature by the
 
10 governor pursuant to section 37-71 or 37-72.  The department
 
11 shall prepare the budget in compliance with federal and state law
 
12 and statewide education policies as set forth by the board.  The
 
13 department shall submit the proposed school-by-school budget to
 
14 the individual schools and the legislature by the opening day of
 
15 each legislative session.
 
16      (c)  Beginning with the regular session of 2001, reporting
 
17 requirements for the department's annual school-by-school
 
18 budgeting shall include:
 
19      (1)  Statewide legislative, executive, and board actions on
 
20           the department budget;
 
21      (2)  Restrictions by the executive, and application of these
 
22           restrictions by the department by program ID, level IV
 
23           and level V program, and cost element;
 

 
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 1      (3)  Reserves held by the state and district offices, along
 
 2           with the rationale and parameters of expenditure for
 
 3           the reserves;
 
 4      (4)  Descriptions of each type of allocation along with the
 
 5           degree of budget flexibility that accompanies each
 
 6           allocation;
 
 7      (5)  Each school's total budget ceiling with documentation
 
 8           of adjustments to the level of funding as compared with
 
 9           previous years;
 
10      (6)  Explanations of criteria for staffing and funding for
 
11           each school; and
 
12      (7)  Any other necessary information.
 
13      (d)  Prior to the beginning of each school year, each school
 
14 shall submit to the department expenditure reports for the
 
15 previous fiscal year that include:
 
16      (1)  Expenditures by each allocation type listed by cost
 
17           element and means of financing;
 
18      (2)  Variances between expenditures and the budget allocated
 
19           for that fiscal year by allocation type, cost element,
 
20           and means of financing;
 
21      (3)  Funds carried over from the prior fiscal year by
 
22           allocation type and means of financing;
 

 
 
 
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 1      (4)  Areas of budget shortfall and surplus; and
 
 2      (5)  Other information that provides an understanding of
 
 3           school level budget actions;
 
 4 provided that the department shall collect the reports and submit
 
 5 them to the legislature within thirty days after the beginning of
 
 6 the school year.
 
 7      (e)  The reports listed in subsections (c) and (d) shall be
 
 8 made available to any interested party upon request.  The
 
 9 department shall provide adequate notification to administrators,
 
10 teachers, parents, and other school level personnel that these
 
11 reports are available for review.
 
12      (f)  Each school shall be given maximum flexibility over the
 
13 funds designated to the school, to the extent allowed for each
 
14 type of funding, and shall utilize its budget to achieve
 
15 instructional program goals."
 
16      SECTION 3.  Section 302A-101, Hawaii Revised Statutes, is
 
17 amended by amending the definition of "school-based budget
 
18 flexibility" to read as follows:
 
19      ""School-based budget flexibility" means an operating budget
 
20 preparation and allocation process that provides maximum
 
21 flexibility to individual schools, complexes, and learning
 
22 support centers in the [preparation and] execution of their
 
23 operating budgets."
 

 
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 1      SECTION 4.  Statutory material to be repealed is bracketed.
 
 2 New statutory material is underscored.
 
 3      SECTION 5.  This Act shall take effect upon its approval.