Report Title:

Small Business Development Center; Appropriation


Appropriates $1,225,000 to fund various items at the Small Business Development Center.


S.B. NO.









Relating to small business development.



SECTION 1. A professional survey commissioned by the small business development center (SBDC) and conducted by Market Trends Pacific, Inc., in 2002 indicated that 9.2 per cent of small business owners in Hawaii admit their own lack of knowledge on how to operate a business.

This represents three thousand five hundred small businesses in the State, out of a total of approximately thirty-nine thousand. This statistic reflects the need throughout the business community for the services of the SBDC.

The legislature finds that the SBDC directly addresses the need of small business owners and managers for greater knowledge of what is referred to as "management-force development." The SBDC provides entrepreneurial skills development by facilitating knowledge transfer and planned change using individual management consulting, management training, research, and advocacy. The need in the State for creating and saving jobs is great. The SBDC possesses the demonstrated ability to respond to those needs. With its current resources, the SBDC is able to work with one thousand small businesses annually. This Act will enable SBDC to maintain its current level of services and to expand its services to include an additional one thousand small businesses for a total of two thousand small businesses annually.

The SBDC is a statewide program in its thirteenth year of operation. It matches state dollars to federal dollars. As a partnership program between the University of Hawaii at Hilo and the U.S. Small Business Administration, the SBDC program leverages the resources of both to enhance the delivery of its services to the small business community.

The legislature further finds that the SBDC is effective. In the professional survey of small business owners conducted in 2002, 32.6 per cent of small business owners cited increased knowledge about business operations as a positive factor in their success. This is a strong indication of the power of management consulting and training. An independent economic impact study conducted by Mississippi State University in 2002 indicated that SBDC clients hired 32.6 per cent more employees than the average small business in Hawaii. A new job was created or an existing one saved for every $1,132 invested by the State in the program. The study also indicated that SBDC clients increased their sales 40.2 per cent more than the average business in Hawaii.

The program provides a significant return on investment for the State. A second independent economic impact study in 2002 conducted by the University of Hawaii at Hilo indicated that the annual economic impact of the program was $55,000,000 and that the program returned $6.73 in new taxes for every dollar invested by the State in the program.

The purpose of this Act is to appropriate funds to the University of Hawaii to support current services and expand the economic development program at the SBDC to serve an additional one thousand small business owners annually for a total of two thousand small businesses served, including high economic impact businesses such as those engaged in high technology.

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $1,225,000 or so much thereof as may be necessary for fiscal year 2003-2004 to support existing programs and expand services at the small business development center as follows:

(1) $100,000 to restore previously waived indirect fees on federal and state grants to the University of Hawaii;

(2) $225,000 to restore funds previously advanced to open a center in Kailua-Kona in compliance with requirements of the U.S. Small Business Administration;

(3) $150,000 to restore salary reductions that were made in 2002; and

(4) $750,000 to expand the economic development program at the small business development center.

The sums appropriated shall be expended by the University of Hawaii for the purposes of this Act.

SECTION 3. This Act shall take effect on July 1, 2003.