Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 538
                                        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. 538, S.D. 1, entitled:


begs leave to report as follows:

     The purpose of this bill is to make the statutory changes
necessary for granting the University of Hawaii total
independence from the executive branch and establishing it as a
separate branch of state government.

     Most notably, this bill:

     (1)  Gives the University of Hawaii control over the
          expenditure and accounting of its moneys;

     (2)  Requires the University to prepare and submit to the
          Legislature a unified budget, six-year program and
          financial plan, and variance report;

     (3)  Exempts the University from the civil service law and
          gives it control over personnel matters;

     (4)  Prohibits more than six members of the Board of Regents
          from being members of the same political party;

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     (5)  Requires the Board of Regents to set the salary of the
          President of the University; and

     (6)  Exempts the University from having to pay awards of
          attorney's fees to small businesses.

     Your Committee finds that the University of Hawaii has
wisely exercised the partial independence granted to it over the
years, starting with Act 320, Session Laws of Hawaii 1986, and
advancing steadily through Act 115, Session Laws of Hawaii 1998,
with satisfactory results.  In order for the University of Hawaii
to realize its full potential, however, it needs to break away
from the institutional restraints of the executive branch.  These
restraints often stifle imaginative thinking and risk taking for
no better reason than the inability to overcome bureaucratic
inertia.  The students, faculty, and administrators of the
University of Hawaii need the freedom and encouragement to dream
of the things that can be and will be for their institution, not
the things that could have been but never were.

     Your Committee notes that the Department of Budget and
Finance has expressed some concerns about this bill, which may
indicate the need for further discussion at a future date.  The
Department of Budget and Finance has been invited to share its
suggestions with the Committee in the spirit of developing a
mutually acceptable bill that will grant the University of Hawaii
independence from the executive branch and establish it as an
independent branch of state government.  Your Committee fully
supports the concepts embodied in this bill and looks forward to
working with the House of Representatives, the University of
Hawaii, and the Governor's cabinet to make this dream come true.

     Your Committee has amended this bill by:

     (1)  Correcting variances in underlying statutory material
          between this bill and the printed versions of the
          Session Laws and the Hawaii Revised Statutes; and

     (2)  Making technical nonsubstantive changes for purposes,
          clarity, and style.

     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. 538, S.D. 1, as amended herein, and recommends that it pass

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Third Reading in the form attached hereto as S.B. No. 538,
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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