Yes vote urged on school financing
By Jennifer Hiller
Advertiser Education Writer
State lawmakers yesterday entered the latest debate on a proposed constitutional amendment that would help finance private school construction projects at lower interest rates.
Members of the House and Senate education committees are urging voters to cast a yes vote Nov. 5 on ballot question two, which would allow private schools to use the state's special-purpose revenue bonds to finance construction projects.
Private schools say the measure would cost the state nothing and bring more construction jobs to Hawai'i through renovation of aging schools.
But the Hawai'i State Teachers Association opposes the amendment, arguing that it takes attention away from a $600 million deferred maintenance problem in the public schools, benefits a small group of select students and blurs the lines between public and private.
Special-purpose revenue bonds are sold by the state to provide financing for utilities, recycling centers, private preschools and hospitals run by nonprofits and low-income government housing.
"A yes vote supporting these bond issues will not affect our public schools," said Rep. Mark Takai, D-34th (Waimalu, Newtown, Pearl City).
State schools superintendent Pat Hamamoto said the department had no reservations about encouraging voters to approve the amendment.
But Karen Ginoza, HSTA president, said the issue is one of priorities. "The state constitution is very clear: It says the state government is here to support public schools. Let's put the priorities on public schools," she said.
Ginoza also said the bonds would benefit only the largest schools with large endowments.
Senate Education Committee chairman Sen. Norman Sakamoto, D-16th (Moanalua, Salt Lake), said the state would face no cost or financial risk. "There is no question that education is in the public interest," he said.
About 34,000 students in kindergarten through 12th grade attend private schools in Hawai'i. The number exceeds 50,000 when colleges are included.
There are 183,000 children in the public schools.
A 2001 report from the Legislative Reference Bureau said the bonds would not cost the public schools money. It also said private schools with the most stable enrollment and healthiest endowments would benefit, but Hawai'i's small private schools have said they would pool together to take advantage of the bonds.
The state makes capital improvement loans through the sale of special-purpose revenue bonds to private investors, who lend money for the project and bear the risk of nonpayment in return for interest payments exempt from federal and state income taxes.
Because the interest on the bonds is tax free, investors are willing to lend money at lower rates. Schools can get loans that are about 25 percent below commercial rates.
The Legislature would have to approve any special-purpose revenue bonds issued.
Reach Jennifer Hiller at jhiller@honoluluadvertiser.com or 525-8084.
