Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 426
                                        S.D. 2

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Ways and Means, to which was referred S.B.
No. 426, S.D. 1, entitled:


begs leave to report as follows:

     The purpose of this bill is to establish a program for the
specific purpose of maximizing the receipt of federal revenues
for state agencies and programs.

     The program is intended to secure eligible federal funds and
grants for various state programs.  In particular, the bill
provides for this program to serve as a facilitator in state
government responsible for applying for and maximizing federal
funds and as the State's clearinghouse for information on federal
funds; serve as an "early alert" on opportunities for obtaining
federal funds to appropriate state agencies; coordinate all state
efforts in applying for federal funds; and monitor federal
compliance, including following-up with applicable federal
agencies on behalf of state departments.

     The bill further provides that the program will help pool
applicable agency applications for federal funds into one or more
multi-agency applications to maximize the target populations that
are served by those agencies in applying for federal funds.  The
bill also offers incentives to state agencies to work with the
program in aggressively pursuing federal funds; provides for the

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temporary transfer of personnel from other state agencies into
this program; requires it to prepare comprehensive annual reports
to the legislature; requires each state agency to designate
employees as federal funds coordinators; and creates a grant
writing team in the program.  Finally, this bill makes permanent
the interagency federal revenue maximization revolving fund by
repealing the June 30, 1999, sunset date for that fund.

     Your Committee is supportive of the creation of a permanent
agency in state government to aggressively seek federal dollars
on behalf of state programs.  Your Committee finds that there is
often a very limited time period in which to secure federal
assistance for many state programs, much of which is available on
a matching basis with state funds, and that the existing
piecemeal approach to seeking new federal funds and grants is
often counterproductive.  The creation of a program for federal
revenue maximization would allow state agencies to pool their
applications as appropriate into a consortium of agencies to
become more competitive with state agencies on the Mainland
representing larger populations.  Finally, the creation of a
professional grant writing team would help to consolidate these
important functions in one office with expertise in seeking grant

     Your Committee, upon further consideration, has amended the
bill by:

     (1)  Clarifying that federal funds refer to "new" federal
          assistance provided or potentially made available to
          state agencies after the effective date of the bill;

     (2)  Providing for the establishment of the program for
          federal revenue maximization within the Department of
          Business, Economic Development, and Tourism or such
          other comparable agency as determined by the Governor,
          instead of within the Research Corporation of the
          University of Hawaii;

     (3)  Providing that federal funds obtain by the program,
          with or without the assistance of the departments,
          shall be deposited in the interagency federal revenue
          maximization revolving fund for expenditure by the
          subject agency for programs it administers, rather than
          providing incentives for agencies that aggressively
          pursue grants;

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     (4)  Clarifying that the program for federal revenue
          maximization may receive, as processing fees, up to
          five per cent of the new federal funds obtain as a
          result of the program's efforts;

     (5)  Deleting subsection (d) in section 307-E, providing
          that unexpended and unencumbered funds lapse to the
          credit of the general fund, and designating subsection
          (e) and (d);

     (6)  Deleting the provision in section 29-14, Hawaii Revised
          Statutes, that authorizes the Governor to transfer
          funds between specified departments to obtain
          additional federal funds for medical assistance and the
          work incentive program; and

     (7)  Making a number of technical nonsubstantive changes for
          purposes of style, clarity, and consistency.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
426, S.D. 1, as amended herein, and recommends that it pass Third
Reading in the the form attached hereto as S.B. No. 426, S.D. 2.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,

                                 CAROL FUKUNAGA, Co-Chair

                                 ANDREW LEVIN, Co-Chair

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