Public schools targeted for $21 million budget cut

By Kevin Dayton
Advertiser Capitol Bureau Chief

The public school system will have to trim $7 million from its budget this year and another $14 million next year under statewide cuts proposed by the Cayetano administration this week.

The cuts, part of $48 million that has to be sliced from the state's two-year general treasury budget, may not seem large, but Cayetano and department heads said it will be difficult to absorb the losses because most state departments were trimmed repeatedly as tax collections stalled during the 1990s.

The Cayetano administration has been scrambling to trim budgets for all departments since the Sept. 11 terrorist attacks, which caused visitor arrivals to plummet and a sudden slowing in state tax collections.

The latest estimates are that the state will collect $150 million less in taxes than had been expected this year, and $160 million less than expected next year, requiring abrupt spending cuts to balance the budget.

Acting Schools Superintendent Patricia Hamamoto said it is too soon to say how the cuts might affect the state's public school classrooms, but said the Department of Education will try to create a "firewall" that protects school operations.

"Our first priority always is to ensure that the schools are able to continue to deliver the services to the kids," she said. "As much as possible, we will do everything that we can to ensure that school level is protected, and they are able to continue in the least disruptive manner."

Karen Knudsen, chairwoman of the Board of Education's budget committee, said the proposed cuts are less than she had expected, but will still hurt.

"The district office has taken a series of cuts over the years, and yet that probably will be one of the areas we'll be looking at," Knudsen said. "We'll want to shelter the schools as much as possible."

The general treasury budget for the school system is $1.28 billion this year, and $1.33 billion next year.

The cuts the Cayetano administration proposed would shave about 0.5 percent off this year's general treasury budget, and almost 1 percent off next year's budget. That's about $48 million in cuts to a $7.1 billion two-year general treasury budget.

To make that plan work, Cayetano has said lawmakers must give him authority to tap $213 million in cash in the Hawai'i Hurricane Relief Fund. Some argue that hurricane money should be returned to the people who paid insurance premiums into the fund, but Cayetano disagrees.

He said that unless he is given authority to spend the hurricane fund surplus, he will be forced to impose deeper budget cuts.

Overall the administration is proposing a 1 percent cut this year and 2 percent next year in what it calls "discretionary spending." Discretionary spending does not include fixed costs such as negotiated pay increases and payments on the state debt, which would not be cut.

Discretionary spending also does not include the cost of court-ordered settlements such as the Felix consent decree, which requires the state to improve special-education services for schoolchildren. Spending for Felix and other court mandates would not be cut.

Officials in the state Department of Budget and Finance and the governor's office refused to release the detailed list of proposed cuts that were presented to Cabinet members Wednesday morning, saying they don't want to make the information public because some of the figures may change.

However, budget officials in some departments did release the proposed cuts:

• Department of Human Services would see cuts of about $855,000 this year and $1.68 million next year. DHS Director Susan Chandler said she is not ready to discuss the details of where the department will trim the budget.

"The governor said that he is certainly wanting to protect those in need, so we have to be creative," she said.

• Evan Dobelle, University of Hawai'i president, said the university system will also have to absorb cuts of 1 percent in discretionary spending this year. Dobelle said he had already been preparing for cuts of 5 percent.

"I'm a state agency, and as long as no one else is being held harmless, then we have a responsibility to try and do our best given the fact that this is the result of terrorism and we all have to deal with it," Dobelle said.

• The state Department of Health would have to absorb cuts of $1.57 million this year and $3.5 million next year. Nodetails were available yesterday on where the department might cut.

The departments are expected to find ways to make the cuts, and report back to Budget and Finance on their plans by Dec. 6. Department heads may also schedule meetings with the governor the following week to press for changes in planned cuts.

Hamamoto said the Department of Education will distribute a "memo on austerity" in a few days to all schools and district offices that will ask employees to find places to cut.

"We're going into austerity and we need to be mindful of the funds, what we have and what we need to do for the kids," she said.

House Education Committee Chairman Ken Ito, D-48th (Kane'ohe), said the Department of Education has been sheltered from budget cuts through the years, but this time must find ways to "streamline" its state and district offices operations so that classroom instruction won't be affected.

"I think if they do things efficiently, they can pull it off," Ito said.

Advertiser reporter Lynda Arakawa contributed to this report. Reach Kevin Dayton at kdayton@honoluluadvertiser.com or 525-8070.