Hawaii Department of Education Encounters Obstacles and Delays in Allocating $2 Billion for School Infrastructure

Sen. Lorraine Inouye expressed confidence that Hilo High School would have a new parking garage for its gymnasium by the end of 2024. According to Inouye, the school, which has been in existence for over 100 years, is already lacking sufficient on-campus parking. Inouye stated that having a garage is crucial in case the gym needs to serve as an emergency shelter during a tsunami or fire.

Before Inouye received the news in November that the Department of Education planned to lapse the $7.4 million allocated for the project, an architect had already begun drawing up plans for the garage. The Department of Education also aimed to lapse over $450 million intended to improve facilities at other schools across the state.

“It’s a somewhat chaotic situation,” Inouye commented.

Although the Department of Education has over $2 billion in unspent capital improvement program funds for school facilities, it is still uncertain how or when the accumulation of money will result in campus improvements.

According to the department’s website, the Department of Education has approximately $880 million obligated in contracts for ongoing projects and another $1.2 billion that will lapse by 2026.

The Department of Education leaders have proposed that the Legislature allow $465 million to lapse, but they have until June to spend the money. Some lawmakers argue that unfinished school projects should take priority in the new year.

“Before you embark on new projects, you’ve got to take care of the old projects,” said Sen. Donna Mercado Kim during a recent Senate briefing.

One school affected by the lack of resources is Farrington High School on Oahu, which is losing more than $57 million that would have been used for the construction of a new gym, music building, and other facilities. Representative Ernesto “Sonny” Ganaden, who represents the Kalihi district, stated that the insufficient resources for schools like Farrington, which serve low-income communities, only fuels distrust in public schools and encourages families to withdraw from the public education system.

“For many of us who represent Title I schools, the CIP list isn’t pork barrel, it’s not pet projects,” Ganaden emphasized. “These are necessary updates to infrastructure.”

While funding for capital improvement projects in schools has increased in recent years, the Department of Education’s spending has not kept pace. The Covid-19 pandemic further exacerbated the situation, introducing additional delays in the permitting and construction process for school projects.

Currently, the department has approximately 180 projects under construction and $130 million in planned projects that were unable to start over the past three years.

Increasing Funds, Decreasing Expenditures

While senators recently criticized the Department of Education’s oversight and communication regarding CIP projects, legislative appropriations may have contributed to the accumulation of funds over time. Since 2016, the Department of Education’s CIP appropriations have steadily increased, with nearly $1 billion allocated in the 2021 to 2023 fiscal years.

Cheri Nakamura, director of the He’e Coalition, stated that many legislators want to fund attention-grabbing CIP projects like new gymnasiums or auditoriums for schools in their districts. However, as appropriations for new CIP projects accumulate, it becomes more challenging for the Department of Education to manage ongoing projects effectively.

Nakamura also emphasized the need for better prioritization of facility projects, especially for schools in immediate need of repairs, such as broken bathroom faucets or leaking roofs.

Officials also recognize the need to balance legislative priorities with the Department of Education’s capacity for construction and project management. Currently, the Department of Education’s office of facilities and operations has over 70 job vacancies.

“We do need to make sure that we have the capacity and (the projects) are truly what the school leadership needs and wants, and legislators are not supplanting DOE work with our projects,” said Rep. Amy Perruso.

While CIP appropriations have increased in recent years, the department’s spending has decreased. From 2018 onwards, the department has been spending less and less of its CIP budget. In the 2023 fiscal year, it spent less than 1% of its appropriations.

Deputy superintendent Curt Otaguro mentioned that several factors contributed to the recent spending slowdown, including supply chain shortages and delays in the permitting process due to the Covid-19 pandemic. Otaguro mentioned that it could take up to a year and a half to receive a permit for a school CIP project.

Earlier this year, the Department of Education faced another obstacle in spending CIP funds when legislators denied their request for nearly $150 million in project completion funds. These funds help cover unexpected costs during the construction process, but no money was allocated in the 2023-25 biennium budget.

House finance chair Kyle Yamashita stated in an emailed statement that the denial of funding was due to legislators’ concerns about the department’s inefficiencies and improper project planning. He mentioned that the Department of Education’s CIP budget already exceeded the funding allocated to other departments.

Potential Solutions

Not all state departments have faced the same spending challenges with CIP funds in recent years. The University of Hawaii, for example, experienced significant construction progress during the pandemic. With the exception of two projects, the university plans to allocate its entire CIP budget of over $300 million.

The success of the University of Hawaii can be attributed, in part, to the reorganization of its facilities and procurement offices in 2016. This reorganization allowed for easier tracking of ongoing CIP projects and appropriated funding.

The Department of Education is now considering a similar reorganization to address its challenges. During a recent Senate briefing, Deputy Superintendent Otaguro stated that no one in the department is responsible for overseeing CIP projects from start to finish. Senators pointed out that the lack of central organization within the Department of Education contributed to its difficulties in spending CIP funds effectively.

Ways and Means Chair Donovan Dela Cruz mentioned during the briefing that senators may introduce legislation proposing changes to the Department of Education’s office of facilities and operations in the coming weeks.

However, some officials are more optimistic about the department’s potential for improvement.

Board of Education Chair Warren Haruki stated that the Department of Education has conducted a comprehensive review of its facilities and real estate assets over the past few months. This review will enable the department to revise its processes for encumbering and spending CIP funds as necessary.

Chad Farias, executive director of the School Facilities Authority, believes that his agency can also help expedite the spending of CIP funds and completion of school projects in the coming years. While the School Facilities Authority primarily handles construction projects for charter schools and public preschools, it intends to assume responsibility for all CIP funds allocated for public schools within the next two years.

Farias plans to revise the vendor selection process for CIP projects by using a prequalified construction method. This approach could reduce the time for awarding bids by up to 80%. He is hopeful that the School Facilities Authority can apply this approach to more CIP projects and increase efficiency.

Farias acknowledged that these changes will take time but believes that Hawaii schools have the capacity to spend all the CIP funds allocated by the Legislature.

“I’m not afraid of failing,” Farias stated. “I’m only afraid of not getting the opportunity to try.”