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The Honolulu Advertiser
Posted on: Thursday, March 18, 2010

Hawaii auditor says budget aides may have violated law with investment


By Herbert A. Sample
Associated Press

Hawaii news photo - The Honolulu Advertiser

In a stinging report issued today, state auditor Marion Higa asserted that state Department of Budget and Finance officials may have violated state law by investing state funds in student loan-backed securities that do not mature in five years or less.

DEBORAH BOOKER | The Honolulu Advertiser

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HONOLULU State Auditor Marion Higa is accusing Gov. Linda Lingle's top budget aides of exercising inadequate oversight of state finances.

In a stinging report issued Thursday, Higa also asserted that state Department of Budget and Finance officials may have violated state law by investing state funds in student loan-backed securities that do not mature in five years or less.

Higa says neither department Director Georgina Kawamura nor her top investment administrator were consulted prior to purchases of about $1 billion in auction-rate securities in recent years.

Higa says because that market has tanked, the state's investments are expected to lose $254 million in value.

Lingle heatedly criticized a draft of the report earlier this month.