Report Title:

Education Reform; Weighted Student Formula

Description:

Implements education reform and decentralization measures; establishes a weighted student formula for providing operating moneys to individual public schools. (SB3238 HD1)

THE SENATE

S.B. NO.

3238

TWENTY-SECOND LEGISLATURE, 2004

S.D. 2

STATE OF HAWAII

H.D. 1


 

A BILL FOR AN ACT

 

relating to education.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that significant changes need to be made to enhance Hawaii's public education system, and improving student achievement should be the guiding principle behind this effort. At the same time, the legislature recognizes that Hawaii's students, parents, teachers, school administrators, departmental staff, and other educational stakeholders do strive to achieve excellence. Unfortunately, their efforts will never be completely successful until various aspects of the system around them are improved.

The legislature has supported and will continue to support efforts by the department of education to reinvent Hawaii's schools to meet the needs of today's workplace. Research shows that student performance is significantly higher in smaller schools. While comprehensively establishing smaller schools throughout the state is not economically feasible, some schools have taken it upon themselves to create smaller and more manageable learning communities within their schools. Research also strongly supports the need for early childhood education and the establishment of a coherent system that spans all levels of education. The department of education teamed with the University of Hawaii and Good Beginnings Alliance to create a vision for such a system, which was presented in 2002, and is now being implemented.

Despite these efforts, more needs to be done. Currently, public school principals are faced with a nearly impossible task, as they are asked to attend to every detail of operating their schools without enough institutional support or the discretion to expend funds on programs of their choosing. While some support and additional school leadership are provided by the school/community-based management (SCBM) system at many schools throughout the state, SCBM plays a far more limited role at some locations, and has not been implemented at all at others.

Recently, departmental leadership was decentralized through the creation of the complex area system, including the hiring of complex area superintendents. While replacing the old district system with this new structure was an important first step, further changes need to be made to allow meaningful authority to exist as close to the schools as possible. The complex area structure will serve as an excellent base upon which to build these continued reforms. It is the legislature's intent to place a far greater number of decisions, and a much higher percentage of moneys, directly in the hands of individual schools and their leaders.

Another area of improvement necessary to promote excellence in learning is the method by which moneys are allocated to individual schools. Hawaii currently receives high marks nationally for funding equity, as the State's organization under a single statewide district enables it to fairly disburse moneys to schools. In other states, local revenue sources such as property taxes account for a significant portion of school and district funding, resulting in massive financial disparities between schools in more and less affluent areas.

Although the State avoids this particular pitfall, further improvements can be made to ensure that moneys go to the schools that truly have the greatest need, and to place more moneys at the discretion of individual schools. While the current funding system takes into account certain criteria when allocating moneys to schools, it does not comprehensively address the fact that some students cost more to educate than others. For example, students with special needs, such as those with limited English proficiency, or who have physical, psychological, or other impediments to learning, are more expensive to teach than other students who are not faced with these barriers. The current system also does not adequately empower schools by giving them significant authority to expend funds.

One method that can be used to address these funding issues is a weighted student formula. Under such a system, moneys are allocated to schools based on a system of weights that applies to every student in the public schools. To determine which weights apply to each student, the cost of educating a theoretical "baseline" student with no measurable impediments to learning is calculated. Then a set of student characteristics affecting student performance is established and weighted to determine how expensive it is to educate any student, relative to the "baseline" student.

Under a weighted student formula there are several advantages. Among other things:

(1) The true cost of educating students can be much more accurately assessed;

(2) Funds follow students to whichever school they attend;

(3) More operating moneys are placed in the hands of individual schools; and

(4) The budget process becomes more transparent as it is based on dollars, not staff positions.

Another benefit of using this system in Hawaii, is that it may also be applied to the State's charter schools, which have faced significant funding difficulties in recent years. In this way, one funding mechanism can be used to ensure that moneys are distributed fairly to all schools in Hawaii.

However, establishing a weighted student formula cannot be effective in a vacuum. Other reform measures must be implemented as well. Principals must be empowered to act as the chief executive officers of their schools, with more authority relating to budgeting, and more flexibility to expend funds. With these expanded powers, principals will be held accountable for their performance with a system that includes both rewards and sanctions. The legislature also recognizes that principals will need more training and support if they are required to take on additional duties, and are expected to advance student success. Furthermore, the school community management and support system will need to be enhanced if it is to work effectively with principals and become a more critical part of the school's leadership team.

The department of education also faces significant impediments that will likely reduce its ability to effectively implement the weighted student formula. With educational responsibilities spread throughout numerous state agencies, there are various roadblocks to progress that could prevent the department of education and individual schools from successfully performing their duties and making the best use of a new funding system.

The legislature finds that a comprehensive effort addressing all of these issues is required for Hawaii's public schools to maximize student achievement. Accordingly, the purpose of this Act is to enhance educational outcomes in Hawaii's public schools by:

(1) Requiring the department of education to apply a weighted student formula in allocating operating moneys to all public schools;

(2) Transitioning the current SCBM system into a mandatory school community council system that is to be implemented at each public school;

(3) Specifying that seventy-five per cent of general funds appropriated to the department of education, excluding moneys for debt service, shall be allocated to individual school to be expended by principals for school operations;

(4) Appropriating moneys to:

(A) Prepare for the transition to the school community council (SCC) system;

(B) Provide training for principals and SCCs;

(C) Reduce average class size for grades K-2;

(D) Operate and expand parent-community networking centers;

(E) Create and operate the teacher national board certification incentive program; and

(F) Provide textbooks and other learning materials;

(5) Empowering principals to manage their schools and collaborate with schools within their school complexes to improve complex articulation;

(6) Enhancing financial flexibility for the department of education by enabling the department to carry over a greater percentage of moneys and transfer moneys among programs and fiscal quarters;

(7) Transferring responsibility for school physical plant operations and maintenance from the department of accounting and general services to the department of education;

(8) Requiring the department of education to convene an interagency working group to develop detailed plans for transferring functions from various state agencies to the department of education; and

(9) Establishing the committee on weights within the department of education to determine student weights.

SECTION 2. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A- Weighted student formula. Upon the receipt of moneys appropriated for school operations, the department shall allocate funds to public schools through a weighted student formula that takes into account the educational needs of each student. Under the weighted student formula, the department shall:

(1) Create a list of student characteristics that affect the cost of educating students;

(2) Determine the cost of educating a baseline student; and

(3) Create a system of weights based upon the student characteristics which may be applied to the cost of a baseline student to determine the relative cost of educating any student.

As used in this section, "baseline student" means a public school student to which none of the characteristics determined under paragraph (1) apply.

Principals shall expend moneys provided to the principals' schools under the weighted student formula."

SECTION 3. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A-   Teacher national board certification incentive program. There is established within the department, the teacher national board certification incentive program to recognize public school teachers who have achieved national board certification from the National Board for Professional Teaching Standards. The incentive program shall provide:

(1) A $5,000 bonus per year for each public school teacher who maintains current national board certification; and

(2) A reimbursement for each public school teacher applicant who achieves national board certification, to cover the cost of:

(A) The application fee for national board certification; and

(B) Other necessary expenses incurred in fulfilling the requirements to achieve national board certification

for which the applicant has not previously been reimbursed.

The incentive program shall include a mentoring component that encourages and enables national board-certified teachers to assist other teachers and share their teaching expertise."

SECTION 4. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A-    Hawaii principals academy. There is established within the department, the Hawaii principals academy. The academy shall fully support and train department principals in areas including but not limited to:

(1) School budgeting under the weighted student formula;

(2) Curriculum development;

(3) Establishing partnerships with the private sector; and

(4) Becoming better leaders,

to ensure that each principal is trained to fully assume the principal's role as the educational leader accountable under section 302A-1004. The academy may also provide training to school community councils to facilitate their effective collaboration with principals."

SECTION 5. Section 302A-101, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read:

""Weighted student formula" means a formula for allocating operating moneys to individual public schools that includes a system of weighted characteristics affecting the baseline cost of educating each student attending a public school."

SECTION 6. Section 36-35, Hawaii Revised Statutes, is amended as follows:

1. By amending subsections (a) and (b) to read:

"(a) There is created in the state general fund under [AGS 807 (physical plant operations and maintenance)] EDN 100 (school based budgeting) the state educational facilities repair and maintenance account, into which shall be deposited legislative appropriations to the account designated for use solely to eliminate the backlog of school repair and maintenance projects, including the repair or replacement of fixtures, furnishings, and equipment, existing on June 30, 2000. Expenditures from the account shall be subject to sections 37-31 and 37-33 to 37-40. Based on the prioritization approved by the department of education as prescribed by section 302A-1505, appropriations or authorizations from the account shall be expended by the [comptroller.] superintendent of education.

(b) The department of education[, with the assistance of the department of accounting and general services,] shall review the existing condition of school facilities and establish specific vision plans for each school complex based on current repair and maintenance requirements and overall repair and maintenance priorities."

2. By amending subsections (e), (f), and (g) to read:

"(e) The expenditure of funds for any project with an estimated total cost of less than $100,000 shall be exempt from chapter 103D and section 464-4; provided that:

(1) The [comptroller] superintendent of education shall develop internal policies and procedures for the procurement of goods, services, and construction, consistent with the goals of public accountability and public procurement practices, but not subject to chapter 103D. However, where possible, the comptroller is encouraged to use the provisions of chapter 103D; provided that the use of one or more provisions of chapter 103D shall not constitute a waiver of the exemption of chapter 103D and shall not subject the comptroller to any other provision of chapter 103D;

(2) Insofar as is practical, and based on specifications developed, adequate and reasonable competition of no fewer than three proposals shall be solicited for each project, based on rules adopted by the [comptroller;] superintendent of education;

(3) Considering all factors, including quality, warranty, and delivery, the award shall be made to the vendor with the most advantageous proposal;

(4) The procurement requirements shall not be artificially divided or parceled so as to avoid competitive bidding or competitive proposals; and

(5) Formal design for projects shall be done when there is a clear need to preserve structural integrity, health and safety, or to clearly communicate construction requirements.

For all projects, the [comptroller] superintendent of education shall develop a strategy for the efficient and cost-effective use of government and private-sector workforces and consider increased flexibility through public-private partnering, design-build options, cost plus, job order contracts, performance-based contracts, request for proposals, and any other means to improve communications and accelerate repairs while preserving the quality of the repairs.

(f) The [comptroller] superintendent of education shall ensure that all repair and maintenance projects achieve maximum cost-efficiency by emphasizing functional or performance criteria, uniformity of design, and commonality of products, and by avoiding unique or custom requirements that increase costs. The [comptroller] superintendent of education shall develop project specifications based on generic specifications or prescriptive specifications using standard commercial products. Prescriptive specifications may include a qualified product list.

For the purposes of this subsection:

"Generic specification" means a technical specification that is written in a clear, unambiguous, and nonrestrictive manner establishing:

(1) Design, performance, or functional requirements to identify the work to be performed; and

(2) Material standards to be used on a project.

"Prescriptive specification" means a technical specification:

(1) Establishing that the required work to be performed is written in a clear, unambiguous, and nonrestrictive manner; and

(2) Listing manufacturers or products that are acceptable for use on the project.

"Standard commercial product" means a product or material that in the normal course of business is customarily maintained in stock by, or readily available for marketing from a manufacturer, distributor, or dealer.

This subsection shall not apply to any school facility designated a historic property pursuant to section 6E-5.5.

(g) The [comptroller] superintendent of education shall submit an annual report to the legislature, which shall include a financial statement of the account and the status of repair and maintenance projects undertaken pursuant to this section, no later than twenty days prior to the convening of each regular session. Expenditures for repair and maintenance projects undertaken pursuant to this section shall be posted electronically on the Internet by the department of [accounting and general services] education within thirty days of each project's completion."

SECTION 7. Section 36-36, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) There is created in the state general fund under [AGS 807 (physical plant operations and maintenance)] EDN 400 (school support) the school physical plant operations and maintenance account, into which shall be deposited all legislative appropriations to the account.

The moneys in the account shall be used solely for school repairs and preventive maintenance projects scheduled after June 30, 2001. Expenditures from the account shall be subject to sections 37-31 and 37-33 to 37-40. Based on the prioritization approved by the department of education as prescribed by section 302A-1505, appropriations or authorizations from the account shall be expended by the [comptroller.] superintendent of education."

2. By amending subsections (d) and (e) to read:

"(d) The expenditure of funds made under this Act for any project with an estimated total cost of less than $100,000 shall be exempt from chapter 103D and section 464-4; provided that:

(1) The [comptroller] superintendent of education shall develop internal policies and procedures for the procurement of goods, services, and construction, consistent with the goals of public accountability and public procurement practices, but not subject to chapter 103D. However, where possible, the [comptroller] superintendent of education is encouraged to use the provisions of chapter 103D; provided that the use of one or more provisions of chapter 103D shall not constitute a waiver of the exemption of chapter 103D and shall not subject the comptroller to any other provision of chapter 103D;

(2) Insofar as is practical, and based on specifications developed, adequate and reasonable competition of no fewer than three quotations shall be solicited for each project based on rules adopted by the [comptroller;] superintendent of education;

(3) Considering all factors, including quality, warranty, and delivery, the award shall be made to the vendor with the most advantageous quotation;

(4) The procurement requirements shall not be artificially divided or parceled so as to avoid competitive bidding or competitive proposals; and

(5) Formal design for projects shall be done when there is a clear need to preserve structural integrity, health and safety, or to clearly communicate construction requirements.

(e) The [comptroller] superintendent of education shall submit an annual report to the legislature, which shall include a financial statement of the account and the status of school repair and preventive maintenance projects undertaken pursuant to this section, no later than twenty days prior to the convening of each regular session. The department of [accounting and general services] education shall post the following reports electronically on the Internet and update them quarterly:

(1) Expenditures for school repair and preventive maintenance projects undertaken pursuant to this section, shall be posted within thirty days of each project's completion; and

(2) A list of each school's repair and maintenance needs to be undertaken."

SECTION 8. Section 37-41.5, Hawaii Revised Statutes, is amended to read as follows:

"§37-41.5 Department of education; carryover of funds. [(a)] The department of education may retain up to [five] ten per cent of any appropriation, except for appropriations to fund financing agreements entered into in accordance with chapter 37D, [for the school-based budgeting program EDN 100 and for the comprehensive school support services program EDN 150] at the close of a fiscal year and the funds retained shall not lapse until June 30 of the first fiscal year of the next fiscal biennium. The department of education shall submit:

(1) A report to the director of finance ninety days after the close of each fiscal year, which shall be prepared in the form prescribed by the director of finance and shall identify the total amount of funds that will carry over to the next fiscal year; and

(2) A copy of this report to the legislature, as well as a report identifying the carryover of funds on a school-by-school basis, at least twenty days prior to the convening of the next regular session of the legislature.

[(b) Any appropriation retained in accordance with this section shall be used exclusively for the school-based budgeting program EDN 100 and the comprehensive school support services program EDN 150, and of those appropriations allocated to the schools, funds shall remain within the budget of the school to which they were originally allocated; provided that the] The retention of an appropriation shall not be used by the department as a basis for reducing a school's future budget requirements."

SECTION 9. Section 37-74, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) No appropriation transfers or changes between programs or agencies shall be made without legislative authorization; provided that:

(1) Authorized transfers or changes, when made, shall be reported to the legislature;

(2) Except with respect to appropriations to fund financing agreements under chapter 37D, the University of Hawaii shall have the flexibility to transfer appropriated funds and positions for the operating cost category among programs, among cost elements in a program, and between quarters, as applicable; except with respect to appropriations to fund financing agreements under chapter 37D, the department of education shall have the flexibility to transfer appropriated funds and positions for the operating cost category among programs and among cost elements in a program, and between quarters, as applicable; and the Hawaii health systems corporation shall have the flexibility to transfer special fund appropriations among community hospitals facilities as applicable; provided that the Hawaii health systems corporation shall maintain the integrity and services of each individual facility and shall not transfer appropriations out of any facility that would result in a reduction of services offered by the facility, with due regard for statutory requirements, changing conditions, the needs of the programs, and the effective utilization of resources; and

(3) The university and the department of education shall account for each transfer implemented under this subsection in quarterly reports to the governor and annual reports at the end of each fiscal year to the legislature and the governor, which shall be prepared in the form and manner prescribed by the governor and shall include information on the sources and uses of the transfer."

SECTION 10. Section 89-10.6, Hawaii Revised Statutes, is amended to read as follows:

"§89-10.6 [School/community-based management waiver.] Schools; waiver of policies, rules, or procedures. [A] Any school or [a] learning support center [participating in the school/community-based management program] may initiate a waiver from policies, rules, or procedures, including collective bargaining agreements, as provided for in section 302A-1126."

SECTION 11. Section 302A-202, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-202 Student assessments.[]] Any school [electing to participate in school/community-based management] may develop and implement its own student assessment mechanisms; provided that the board shall include the results of the assessments in the educational status report to the legislature and the governor required in section 302A-1004."

SECTION 12. Section 302A-1004, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The department shall implement a comprehensive system of educational accountability to motivate and support the improved performance of students and the education system. This accountability system shall:

(1) Include student accountability; school or collective professional accountability; individual professional accountability for teachers, principals, and other employees; and public accounting for other significant partners to the education process (including[,] but not limited to[,] parents, community members, businesses, higher education, media, and political leadership);

(2) Link authority and adequate resources to responsibility;

(3) Define clear roles for all parties and lines of responsibility and mutual obligation and develop a collaborative process with stakeholders, including representatives of appropriate bargaining units, parents, administration, and students;

(4) Involve fair and adequate assessment against [agreed upon] agreed-upon goals[;], including academic achievement, safety and well-being, and civic responsibility;

(5) Invoke a full and balanced set of appropriate consequences for observed performance, including rewards and recognition for those schools that meet or exceed their goals, assistance to those that fall short, and sanctions for those that, given adequate assistance and ample time, continue to fail to meet goals;

(6) Involve:

(A) A statewide student assessment program that provides annual data on student, school, and system performance at selected benchmark grade levels in terms of student performance relative to statewide content and performance standards and embodies high and rigorous expectations for the attainment of all students; and

(B) An annual assessment in core subjects for each grade level, as conducted by each school;

(7) Involve a comprehensive school profile or report card for each school, which shall include[,] but not be limited to[,] student performance measures, school attendance, drop-out rates, and parental involvement. These reports shall be made available annually to the board, the governor, the legislature, the parents, and the general public;

(8) Require that teachers and administrators engage in the continuous professional growth and development that ensure their currency with respect to disciplinary content, leadership skill, knowledge, or pedagogical skill, as appropriate to their position. This requirement may be established by the department in terms of credit hours earned or their equivalent in professional development activity certified by the department as appropriate in focus and rigor; and

(9) Establish an explicit link between professional evaluation results and individual accountability through professional development of the knowledge, skill, and professional behavior necessary to the position, by requiring that results of the professional evaluation be used by the department to prescribe professional development focus and content, as appropriate.

Beginning with the 2001-2002 school year, the department shall submit to the legislature, the governor, and the board of education at least twenty days prior to the convening of each regular legislative session, a report of the specifics of the design of the comprehensive accountability system, as well as the fiscal requirements and legislative actions necessary to create the accountability system."

SECTION 13. Section 302A-1103, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1103[]] Principal; authority and responsibility[.]; accountability. The role of the principal shall include but not be limited to overseeing the day-to-day management of the school, the primary function of which is to develop and deliver instructional services to students in accordance with statewide educational policy and standards. The principal shall [ensure]:

(1) Ensure that the curriculum facilitates the achievement of the statewide student performance standards adopted for the public school system[.];

(2) Maintain and exercise exclusive authority over the implementation of school policies and operations of the school; and

(3) Collaborate with other principals in the principal's complex to ensure that:

(A) Logical, sequential curricula are adopted within the complex; and

(B) Best practices are shared among, and delivered by, schools within the complex.

Any powers not delegated to the board of education, the superintendent of education, or the executive secretary of the Hawaii teacher standards board by law, nor prohibited by law to a school or the principal of a school, are reserved to the school and the principal of the school.

Principals shall be evaluated and held accountable for observed school and student performance through a set of consequences that includes rewards and recognition, assistance, or sanctions, as appropriate."

SECTION 14. Section 302A-1124, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1124[]] Mandate to initiate [school/community-based management system.] school community councils. (a) The department, through the board and its superintendent, shall [formulate policies, including criteria and procedures to determine which schools and learning support centers shall participate in the system, to initiate a school/community-based management system in the public schools.] establish a school community council system under which each public school shall create and maintain a school community council. School community councils shall:

(1) Formulate school policies to be implemented by the school's principal;

(2) Participate in principal selection and evaluation;

(3) Ensure the school's compliance with the educational accountability system under section 302A-1004;

(4) Develop an academic and financial plan for success; and

(4) Seek to raise the academic performance of all students to state standards.

Rules adopted to implement this section shall be exempt from the public notice and public hearing requirements of chapter 91.

(b) The complex area superintendents shall monitor the school community councils within their respective complexes to ensure the progress and success of the school's improvement plan.

(c) The superintendent may require a school community council to revise its school improvement plan if the plan is in violation of law or conflicts with statewide educational policies and standards. The superintendent may dissolve the existing school community council and establish a new school community council if the existing school community council engages in any act or omission that would constitute gross negligence, wilful and wanton misconduct, or intentional misconduct. The superintendent may appoint or facilitate the creation of an interim school community council at any school that has not established a council.

(d) Unless otherwise specified, each school community council shall establish policies governing the council's composition, election, staggered terms of office for members and officers, and operation; provided that:

(1) The number of school personnel shall be equal to the number of primary stakeholders on any school community council;

(2) At the elementary and middle school levels, each school community council shall be composed of the principal and at least one member representing each of the following groups:

(A) Parents elected by ballots and collected from the parents of the school’s students;

(B) Teachers elected by ballots distributed among and collected from teachers of the school;

(C) Noncertificated school personnel elected by ballots distributed among and collected from noncertificated personnel of the school;

(D) Community representatives selected and elected by parents of the school's students; and

(E) Student representatives selected by the student council of the school;

and

(3) At the high school level, each school community council shall be composed of the principal and at least one member representing each of the following groups:

(A) Parents elected by ballots and collected from parents of the school’s students;

(B) Teachers elected by ballots distributed among and collected from teachers of the school;

(C) Noncertificated school personnel elected by ballots distributed among and collected from noncertificated personnel of the school;

(D) Community representatives selected and elected by the parents of the school's students; and

(E) Students elected by students attending the school.

Vacancies on a school community council shall be filled pursuant to bylaws adopted by the school community council.

For the purposes of this subsection, "primary stakeholders" means students, parents, and community members.

(e) School community councils shall elect officers, including:

(1) A chairperson;

(2) A vice-chairperson;

(3) A secretary; and

(4) Other officers as needed to perform stated duties in support of the work of the council."

SECTION 15. Section 302A-1126, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1126[]] Waiver of policy, rule, or procedures. Any state agency that may be required to act under state law on a matter affecting an individual school, its school community, or a learning support center shall waive otherwise applicable policies, rules, or procedures when requested to do so by a school or a learning support center [participating in the school/community-based management system] unless the agency, within thirty days, can justify a denial to the appropriate authority. The board shall adopt procedures necessary to process waivers initiated by schools or learning support centers [subject to the school/community-based management system]. To maximize administrative efficiency, the board may issue a general waiver of policies, rules, or procedures that applies to all or multiple schools that seek comparable waivers of the same policies, rules, or procedures. This section shall apply to collective bargaining agreements as provided for in all relevant collective bargaining agreements negotiated pursuant to chapter 89."

SECTION 16. Section 302A-1185, Hawaii Revised Statutes, is amended to read as follows:

"§302A-1185 New century charter schools; funding. (a) Beginning with the fiscal year [2004-2005] 2006-2007 supplemental budget request, and each budget request thereafter, the charter school administrative office shall submit a request for general fund appropriations for each new century charter school based upon[:

(1) The actual and projected enrollment figures in the current school year for each charter school; and

(2) A per pupil amount for each regular education and special education student, which shall be equivalent to the total per pupil cost based upon average enrollment in all cost categories, including comprehensive school support services but excluding special education services, and for all means of financing except federal funds, as reported in the most recently published department of education consolidated annual financial report.

The legislature shall make an appropriation based upon the budget request; provided that] the weighted student formula established pursuant to section 302A- . The legislature may make additional appropriations for collective bargaining increases for charter school employee members of collective bargaining units and for other requested amounts. The governor, pursuant to chapter 37, may impose restrictions or reductions on charter school appropriations similar to those imposed on other public schools.

(b) All federal financial support for new century charter schools shall be no less than all other public schools; provided that if administrative services related to federal grants and subsidies are provided to the charter school by the department, the charter school shall reimburse the department for the actual costs of the administrative services in an amount that does not exceed six and one-half per cent of the charter school's federal grants and subsidies.

Any new century charter school shall be eligible to receive any supplementary financial grant or award for which any other public school may submit a proposal, or any supplemental federal grants limited to new century charter schools; provided that if department administrative services, including funds management, budgetary, fiscal accounting, or other related services, are provided with respect to these supplementary grants, the charter school shall reimburse the department for the actual costs of the administrative services in an amount that does not exceed six and one-half per cent of the supplementary grant for which the services are used.

All additional funds that are generated by the local school boards, not from a supplementary grant, shall be separate and apart from allotted funds and may be expended at the discretion of the local school boards.

[(c) To enable new century charter schools to access state funding prior to the start of each school year, foster their fiscal planning, and enhance their accountability, the charter school administrative office shall:

(1) Provide forty per cent of a new century charter school's per pupil allocation based on the new century charter school's projected student enrollment no later than August 1 of each fiscal year; provided that the new century charter school shall submit to the charter school administrative office a projected student enrollment no later than May 15 of each year;

(2) Provide an additional forty per cent of a new century charter school's per pupil allocation no later than October 15 of each year; provided that the new century charter school shall submit to the charter school administrative office a verified student enrollment no later than September 15 of each year; and

(3) Provide the remaining twenty per cent per pupil allocation of a new century charter school based on the new century charter school's verified student enrollment no later than January 1 of each year; provided that the new century charter school shall submit to the charter school administrative office a revised student enrollment no later than December 1 of each year.

(d)] (c) The department shall provide appropriate transitional resources to a new century conversion charter school for its first year of operation as a charter school based upon the department's allocation to the school for the year prior to the charter school's conversion.

[(e)] (d) No new century charter school nor new century conversion charter school may assess tuition."

SECTION 17. Section 302A-1301, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1301[]] School system financial accountability. [(a) Beginning with the 1995-1997 fiscal biennium, the] Unless otherwise approved by the legislature, the department shall allocate to individual public schools no less than seventy-five per cent of general funds appropriated to the department, excluding debt service, according to the weighted student formula established under section 302A- . Principals shall be authorized to expend funds allocated through the weighted student formula to the principals' respective schools. The department's administrative expenditures shall not exceed [6.5] six and one-half per cent of the total department operating budget unless approved by the legislature.

[(b) The department shall not transfer any funds appropriated under the school-based budgeting program EDN 100 of the state budget, except for unforeseeable circumstances that pose a threat to the health and safety of personnel and students, and subject to approval by the governor and notification to the legislature.]"

SECTION 18. Section 302A-1502.4, Hawaii Revised Statutes, is amended by amending subsection (q) to read as follows:

"(q) The [state comptroller] superintendent of education shall submit an annual report of the progress of the Hawaii 3R's school repair and maintenance fund no later than twenty days prior to the convening of each regular session of the legislature."

SECTION 19. Section 302A-1505, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Prior to meeting with the department [of accounting and general services] to advise it of a school's repair and maintenance needs, the school's principal and the business and fiscal officer shall consider the recommendations made by the [school/community-based management council, if there is such a council at the school;] school community council or the local school board, if the school is a new century charter school or a new century conversion charter school. [If there is no school/community-based management council or local school board, then the school's principal shall appoint a standing committee composed of a teacher, a member of the support staff, a parent, a student, and a community member.]"

SECTION 20. Section 302A-1507, Hawaii Revised Statutes, is amended to read as follows:

"[[]§302A-1507[]] Classroom cleaning project; established. (a) There is established a classroom cleaning project in all public schools [designated to participate in school/community-based management]. Each [school/community-based management] school, through its [council,] school community council, may develop mechanisms to provide for classroom cleaning, including but not limited to having parent, student, or other community groups clean the classrooms on a regular, continuing basis.

(b) [School/community-based management schools] Schools may use any available resources to achieve the purposes of this section; provided that no full-time custodial staff currently employed at the school shall be displaced."

SECTION 21. Section 302A-101, Hawaii Revised Statutes, is amended by deleting the definition of "school/community-based management system".

[""School/community-based management system" means a method of educational management that diffuses educational decisionmaking to involve or secure the input of those persons directly affected by the decision to be made at the school level, and encourages school-initiated methods for achieving educational goals established statewide by the board.""]

SECTION 22. Section 302A-601, Hawaii Revised Statutes, is repealed.

["[§302A-601] Selection of school personnel. School/community-based management councils may participate in the selection of school personnel by providing input into the selection process."]

SECTION 23. Section 302A-1125, Hawaii Revised Statutes, is repealed.

["[§302A-1125] Educational objectives. The board shall formulate such policy and exercise such control as may be necessary to define a common set of educational goals that the schools subject to the school/community-based management system shall be responsible for fulfilling. The board shall also be responsible for formulating standards for measuring the efforts of each participating school toward achieving those goals each year. The participating schools shall be free to use all reasonable means to accomplish those goals with the resources available to them."]

SECTION 24. Section 302A-1306, Hawaii Revised Statutes, repealed.

["[§302A-1306] School priority program; established. (a) There is established within the department a school priority program to augment regular instruction and other educational services at the discretion of the individual public schools. Further, it is the intent of the legislature that the school priority program promote the equitable distribution of educational resources statewide, strengthen the scope of decisionmaking, increase flexibility in resource allocation at the school level, and provide a systematic method of conforming resource allocation to the unique needs and priorities of individual schools.

(b) All moneys to carry out the purposes of the school priority program under this section to section 302A-1309 shall be allocated by the legislature through appropriations out of the state general fund.

(c) The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section to section 302A-1309."]

SECTION 25. Section 302A-1307, Hawaii Revised Statutes, is repealed.

["[§302A-1307] Distribution of resources. The superintendent shall allot the moneys of the school priority program to the school districts based on enrollment. In the allotment of positions to the districts, the superintendent shall calculate each district's entitlement based on enrollment and may deploy one instructional resource augmentation position for each two hundred fifty students enrolled in each school; provided that all positions shall be deployed."]

SECTION 26. Section 302A-1309, Hawaii Revised Statutes, is repealed.

["[§302A-1309] Departmental controls. The superintendent shall develop and implement appropriate planning procedures and follow-up accountability reports, without regard to chapter 91, to ensure sound planning, control, and accountability in the use of moneys allocated by the legislature to the school priority program. The procedures and reports, however, shall recognize the need for providing the schools latitude and discretion to determine their needs and priorities, and shall avoid imposing undue amounts of paperwork and administrative burdens on the schools.

The department shall submit an annual report to the legislature, which shall include but not be limited to an accounting of how funds were used by the schools."]

SECTION 27. There is established within the department of education the committee on weights to enable the implementation of the weighted student formula pursuant to section 302A- . The committee shall:

(1) Create a list of student characteristics affecting the cost of educating students;

(2) Determine the cost of educating a baseline student;

(3) Establish a system of weights based upon the student characteristics that may be applied to the cost of a baseline student to determine the relative cost of educating any student;

(4) Determine specific student weights, including their dollar value;

(5) Determine which programs shall be included in the amount of funds to be allocated through the weighted student formula.

The composition of the committee on weights shall be determined by the board of education. The chair of the board of education or the chair's designee shall chair the committee on weights.

The committee on weights may form advisory subcommittees in order to obtain input from urban and rural school communities, including parents and students; teachers, principals, and other school staff, including their collective bargaining representatives; the legislative and judicial branches of state government; the counties; private businesses; and other segments of the State’s population deemed appropriate by the board of education.

The members of the committee on weights shall serve at the pleasure of the board of education and shall not be subject to section 26-34, Hawaii Revised Statutes.

All members of the committee on weights shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

SECTION 28. The department of education shall convene an interagency working group to develop comprehensive plans for transferring certain rights, powers, functions, duties, resources, and positions from the department of accounting and general services, department of budget and finance, department of health, department of human resources development, department of the attorney general and the department of human services to the department of education. Rights, powers, functions, duties, resources, and positions to be transferred shall include but not be limited to:

(1) The expending of capital improvement funds for construction of new school facilities and resources including positions for repairs and maintenance services;

(2) The funding of collective bargaining agreement increases;

(3) The securing, administering, use, and expending of federal funds and other aid, including their custodial supervision;

(4) The capital improvement project allotment process;

(5) The determination of retirement and other employee benefits;

(6) The operation of a human resources system including the recruitment, certification, examination management, classification, and compensation of department of education employees and labor relations;

(7) Negotiating worker's compensation claims and labor- management relations within the department of education;

(8) Conducting employment background checks for A+, private vendors, and other employees and trainees who work with public school students; and

(9) School health aides.

The working group shall include the following individuals, or their designee:

(1) The superintendent of education;

(2) The comptroller;

(3) The director of human resources development;

(4) The director of human services;

(5) The director of health;

(6) The director of budget and finance; and

(7) The attorney general.

The department of education may recommend to the legislature deletion or addition of rights, powers, functions, duties, resources, and positions that are to be transferred as a result of the working groups deliberations which shall be included and reflected in the required plans and legislation.

The working group shall submit its comprehensive plan, including proposed legislation to implement plans for the transfer of rights, powers, functions, duties, resources, and positions relating to the departments of accounting and general services and the department of human resources development to the legislature not less than thirty days prior to the convening of the regular session of 2005.

The working group shall submit its comprehensive plan including proposed legislation to implement plans for the transfer of rights, powers, functions, duties, and resources relating to the departments of budget and finance, the attorney general, department of health, and department of human services not less than thirty days prior to the convening of the regular session of 2006.

SECTION 29. The department of education shall submit to the legislature no later than twenty days prior to the convening of the regular session of 2005:

(1) A detailed plan for implementing the weighted student formula;

(2) A list of statutes, rules, policies, or procedures that need to be amended or removed to enable the effective implementation of the weighted student formula; and

(3) A list of mandated programs that are recommended to be repealed to enable the department and individual schools to have greater flexibility in budgeting, operations, and curriculum management.

SECTION 30. The department of education shall convene a working group to create a plan for the implementation of performance contracts for principals beginning with the 2006-2007 school year. The working group shall consist of:

(1) The superintendent of education;

(2) Representatives of complex area superintendents;

(3) Representatives of school principals;

(4) The exclusive representative for collective bargaining unit 6; and

(5) Representatives of any other agency, organization, or group as deemed appropriate by the superintendent of education.

The working group shall:

(1) Establish appropriate performance criteria for which principals should be evaluated under performance contracts, including:

(A) Core criteria to be incorporated into performance contracts statewide; and

(B) Criteria that may be used at the discretion of individual schools;

(2) Determine appropriate performance benchmarks, or methods of devising performance benchmarks, that may be used to assess principal performance relative to expected standards;

(3) Determine appropriate rewards, assistance, and sanctions to be included or considered for inclusion in performance contracts; and

(4) Address any other issue necessary to allow for the implementation of performance contracts.

The department of education shall submit findings, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2005.

SECTION 31. Existing school community-based management councils shall prepare for the transition to school community councils pursuant to this Act in the 2005-2006 school year. All policies or bylaws adopted, and all decisions made, by a school/community-based management council shall remain in effect until repealed or revised by members of the new school community council. The department of education shall ensure that schools not participating in the school/community-based management system are prepared for the implementation of school community councils in the 2005-2006 school year.

SECTION 32. No later than July 1, 2006, the board of education shall adopt for all public schools, except for multi-track schools, a single unified school calendar to apply to the 2006-2007 school year and every school year thereafter.

SECTION 33. All the rights, powers, functions, duties, and resources, excluding positions unless transferred under the supplementary budget Act of 2004, of the department of accounting and general services relating to school physical plant operations and maintenance, including moneys in:

(1) The state educational facilities repair and maintenance account;

(2) The school physical plant operations and maintenance account; and

(3) Hawaii 3R's school repair and maintenance fund

shall be transferred to the department of education effective July 1, 2004.

SECTION 34. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the department of accounting and general services relating to the functions transferred to the department of education shall be transferred with the functions to which they relate.

SECTION 35. Nothing in this Act is intended to alter or otherwise affect the rights, remedies, and procedures afforded under the terms of collective bargaining agreements, memoranda of understanding, or other agreements in effect on January 8, 2002, between the board of education and the exclusive representatives of collective bargaining units 5 and 6, respectively.

SECTION 36. Any law, rule, or policy enacted, adopted, or promulgated after the effective date of this Act shall not exempt a principal, the superintendent of education, or the executive secretary of the Hawaii teacher standards board from taking actions they may be required to take with respect to public school or department of education employees in order to implement the weighted student funding system.

SECTION 37. When collective bargaining agreements, memoranda of understanding, or other agreements are renegotiated, the board of education shall ensure that those agreements do not prohibit actions that a principal, the superintendent of education, or the executive secretary of the Hawaii teacher standards board may be required to take with respect to public school or department of education employees in order to implement the weighted student funding system.

SECTION 38. In the event of a conflict between this Act and section 89-10(d) or 89-19, Hawaii Revised Statutes, this Act shall control.

SECTION 39. There is appropriated out of the general revenues of the State of Hawaii the sum of $683,780 or so much thereof as may be necessary for fiscal year 2004-2005 for the department of education to provide professional development for principals to be expended as follows:

(1) $500,000 to:

(A) Establish and operate the Hawaii principals academy which shall coordinate professional development and training for principals within the department of education;

(B) Collaborate with public and private partners in leadership development; and

(C) Provide financial training in preparation for the implementation of the weighted student formula;

and

(2) $183,780 to fund positions, trainers, and expenses for the operation of the administrator certification for excellence program.

The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 40. There is appropriated out of the general revenues of the State of Hawaii the sum of $250,000 or so much thereof as may be necessary for fiscal year 2004-2005 for the department of education to:

(1) Prepare for the implementation of the elected school community councils; and

(2) Provide initial training for the school community councils to effectively address the implementation of the weighted student formula.

The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 41. There is appropriated out of the general revenues of the State of Hawaii the sum of $2,143,350 or so much thereof as may be necessary for fiscal year 2004-2005 for seventy-five full time equivalent (75.00 FTE) regular elementary teachers for the department of education to lower average class size in kindergarten, grade 1, and grade 2.

The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 42. There is appropriated out of the general revenues of the State of Hawaii the sum of $1,743,900 or so much thereof as may be necessary for fiscal year 2004-2005 for parent-community networking centers, to be expended as follows:

(1) $483,000 to fund one hundred sixty-one schools with $3,000 each for supplies, equipment, and telephones;

(2) $191,400 to fund twenty-two schools that are currently funded at $6,800 per year, with an additional $8,700 to bring them up to the basic funding level of $15,500 to implement and sustain parent-community networking centers, phases I and II; and

(3) $1,069,500 to establish a parent-community networking center in sixty-nine schools at the rate of $15,500 per school.

The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 43. There is appropriated out of the general revenues of the State of Hawaii the sum of $480,000 or so much thereof as may be necessary for fiscal year 2004-2005 for the teacher national board certification incentive program established in section 3 of this Act.

The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 44. There is appropriated out of the general revenues of the State of Hawaii the sum of $3,000,000 or so much thereof as may be necessary for the fiscal year 2004-2005 for the department of education to purchase new and recently published textbooks and other learning materials.

The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 45. There is appropriated out of the general revenues of the State of Hawaii the sum of $10,000 or so much thereof as may be necessary for fiscal year 2004-2005 to support the operations of the committee on weights established in this Act.

The sum appropriated shall be expended by the department of education for the purposes of this Act.

SECTION 46. The sums appropriated by this Act for fiscal year 2004-2005 shall be deemed part of the budget appropriations of the department of education for the purposes of developing and submitting the executive budget request for the biennium budget for fiscal years 2005-2006 and 2006-2007. The department of budget and finance shall consider the sums appropriated by this Act as if appropriated in the budget Act.

SECTION 47. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 48. This Act shall take effect upon its approval; provided that:

(1) Sections 3, 4, 6, 7, 8, 9, 18, 39, 40, 41, 42, 43, 44, and 45 shall take effect on July 1, 2004;

(2) Sections 2, 5, 16, 17, 24, 25, and 26 shall take effect on July 1, 2006, and shall apply to the 2006-2007 school year; and

(3) Sections 10, 11, 13, 14, 15, 19, 20, 21, 22, and 23 shall take effect on July 1, 2005, and shall apply to the 2005-2006 school year.