Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 456
                                     S.D. 2

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Higher Education, to which was referred
S.B. No. 456, S.D. 2, entitled: 


begs leave to report as follows:

     The purpose of this bill is to appropriate funds to the
Office of Hawaiian Affairs (OHA) to provide tuition waivers to
Hawaiian students at the University of Hawaii (University).
Funds appropriated shall be credited against the State's
obligation to pay OHA a pro rata share of ceded land revenues.

     The University and a number of individuals submitted
testimony in support of the bill.  The Office of Hawaiian
Affairs, the Ilioulaokalani Coalition, the Associated Students of
the University of Hawaii, and a number of individuals testified
in support of the bill with amendments to statutorily mandate
tuition waivers for all Hawaiian students.  

     A petition with numerous signatures was received supporting
free tuition for all students of Hawaiian ancestry.  An
individual testified in opposition to the bill, citing OHA's
responsibility to address this issue.  Also concerns were raised
on the expansion of benefits beyond native Hawaiians.

     Your Committee finds that Hawaiians are represented in a
much lower proportion in the University system than they are in
the general population.  According to a "FACTS" brochure printed
by the University Relations and Institutional Research Office in
December 1998, while approximately 25 percent of the student

                                 STAND. COM. REP. NO. 1148
                                 Page 2

population in the public school system is Hawaiian, only 14
percent of the 11,500 undergraduate students on the Manoa campus
are of Hawaiian ancestry.  Fully 25 percent of Hawaiians
attending the Manoa campus drop out by the end of their second
year.  And, the graduation rate of Hawaiian students from the
University system with a four-year degree is far less than that
of the general University student population.  

     Your Committee recognizes the special relationship that the
Hawaiian people have with the State of Hawaii.  As such, your
Committee supports the concept of tuition waivers as an important
means of providing access to postsecondary education for them.

     In 1993, the Legislature passed Act 360, Session Laws of
Hawaii (SLH) 1993, which mandated the University to waive all
tuition fees for 250 Hawaiian students in addition to tuition
waivers that were already being granted.  At that time, there
were other legislatively mandated tuition waivers.  Also at that
time, University tuition revenues were deposited in the general
funds of the State.  

     In 1995, the Legislature passed Act 161, SLH 1995, which
granted increased authority to the University to manage its
resources.  This Act created a special fund under University
control for the deposit of tuition revenues.  At the same time,
the Legislature felt that because the University was being given
the authority to control income generated from tuition, which is
a significant part of overall UH revenues, it was more
appropriate for the University, rather than the Legislature, to
determine how and to whom tuition waivers should be granted.  The
statutorily mandated tuition waivers for the 250 Hawaiian
students was repealed, as well as other legislatively mandated
tuition waivers.  However, the University agreed to maintain
these tuition waivers, despite their removal from statute.
However, from that time, any new legislatively mandated tuition
waivers would require appropriations.

     Your Committee finds that, without appropriations, any bill
to provide additional Hawaiian students in the University system
with full or partial tuition waivers would amount to an unfunded
mandate.  This, in turn, would essentially amount to a reduction
to the University budget, depriving other students of services
and programs.  Therefore, your Committee finds that, at this
time, rather than mandating that the University provide
additional tuition waivers to a specified number of Hawaiian
students, and to be consistent with the process the Legislature
has provided for regarding other tuition waivers, a separate
appropriation should be made to the University to provide as many
tuition waivers for Hawaiian students as possible.  

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                                 Page 3

     The discussion during the hearing raised the issue of the
appropriate funding source for tuition waivers for Hawaiian
students.  At least two sources are possible, one of which is
general funds.  The other source is funds allocated to OHA
pursuant to the ceded lands settlement, which is now proceeding.
If appropriate, the bill should later be amended to properly
address this issue.

     Relatedly, your Committee would like to note that the
Admission Act cites public educational institutions as one of the
five purposes for which ceded lands may be used.  Of course,
another of the purposes is the betterment of the conditions of
native Hawaiians.  And so, ceded lands issues are complex and not
easily resolved.

     Also raised in the discussion was the issue of whether a
blood quantum requirement for tuition waivers for Hawaiian
students should be established.  One testifier said that the
fifty percent blood quantum requirement for Hawaiian Home Lands
has resulted in conflicts among those of Hawaiian ancestry.
Another testifier noted that the suggestion from the Hawaiian
community at the time the Hawaiian Homes Commission Act was
passed was for a one-thirty-second blood quantum requirement,
which was not adopted.  

     Recognizing the complexity of the issues involved, your
Committee urges that discussions continue on this matter.   

     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. 456, S.D. 2, and recommends that it pass Second Reading and
be referred to the Committee on Judiciary and Hawaiian Affairs.

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

                                   DAVID MORIHARA, Chair