HONOLULU — Gov. Linda Lingle and her top budget aide are defending their handling of $1 billion in student loan-backed securities a day after a stinging audit criticized their actions.

Lingle said Friday that state Auditor Marion Higa demonstrated a lack of knowledge about Hawaii’s financial structure by insinuating that the money could help ease the state’s budget crunch.
Budget and Finance Director Georgina Kawamura says most of the money that was invested in the securities is dedicated for transportation uses and did not originate in the state’s general fund.
But Kawamura acknowledged she gave verbal, not written, approval to exceed the office’s policy of placing no more than 20 percent of the state’s investments in any one type of securities.