"Budget, Furloughs, and Race to the Top"
May 5, 2010
Waters: Aloha and welcome to another edition of Viewpoints. I'm Lynne Waters and this is a production of the State of Hawaii, Department of Education, looking at what's going on in your public school system. And I think today more so in the last 20 or 30 years that I can remember, public education is at the top of most people's minds. It certainly has occupied the newspaper headlines and newscast headlines, and it seems to be something that we are all concerned about. We're going to spend the next half hour updating you on what's going on, particularly on the money side. We'll be talking about the budget, we'll talk about furlough Fridays, and we'll also talk about Race to the Top, the Federal initiative to bring money into school districts that want to be innovative, and we are certainly in the hunt on that. So let's start first by getting an update on where we ended up with this year's legislation and the budget. So we are happy to welcome to the program Kathy Matayoshi who is serving as interim superintendent, and has been on the job only five months. Seems longer. Been a busy five months; and Garrett Toguchi, Chairman of the State Board of Education who is one of the longest serving board members since 1996 -- fourteen years on the board, and again is serving as the chair. So Kathy tell us where we ended up with this year's session. We thought cuts were going to be very deep for public education and it ended up being not quite so bad. So how did we end up and what can we expect in the coming months?
Matayoshi: We did start the year with a tremendous amount of I guess a little bit of fear that the budget situation would get even worse than it was. And in the course of the legislative session we did see proposals to cut the department budget very significantly, $80 million in addition to what was already reduced. At the end of the day though, I think the legislature really stood by what they said, which was that they want to protect public education and we ended up with a budget that essentially adopted the proposals from the Board of Education for about $35 million from program cuts, and also restored to the weighted student formula the funds that go directly to schools: $22 million. So in essence the schools have additional funds and if they like the programs and they want to keep them going, they have the option to agree together to fund some of the programs that were reduced in the budget. So that's the overall situation for our budget for next year. You know we are the largest department in the state. We are a good 1/3 of the state budget, so it would have been unreasonable to expect that we would escape with no budget cuts. That would have I think been unfair to the other departments and the other essential services that state agencies provide. We did take our share of hits in the budget, but again I think the budget as it was completed reflected desire on the part of the legislature to preserve as much as they could of the public education budget.
Waters: So some of the cuts the Board recommended were adopted. Were you pleased with what you folks had put on the table in terms of the final product, or felt it could have gone further? How is this from your perspective?
Toguchi: I would hate to say that we were pleased with it because basically we were asked to make a recommendation for a percentage, an additional percentage reduction, during the legislature, and our option was to either respond to that request with a recommendation of "x" percentage of cuts, or to not provide any recommendation, in which case the legislature would probably make their own cuts. And so as typical of what we do we like to have the decision-making authority, and with the department's cooperation we settled on programs that we felt could be reduced either completely or by percentages for various reasons. Some reasons include that the program may not affect a significant number of students, may not be state-wide in nature. But it may also may be programs where schools are supportive, but through weighted student formula schools can also continue to support those programs by providing funding directly from their school budget, because their students are going to these programs. But for the most part, the reductions came from various percentage cuts throughout the DOE which you know, it's hard to determine what impact that's going to have until after you start that school year because those are services that support schools whether it's supporting the student, supporting the faculty, supporting operations. And until we actually start the year without those funds the schools don't know what the impact is going to be. They may be that responses for repair and maintenance may be slowed because we've lost a lot of money that was typically used to contract with services right away. It could be other things like IT services. It could be special education related services that we still have to provide but in a more cost effective manner.
Waters: I was going to ask you to give me some specifics which you already did. But can you talk further about any other school-level programs that were cut? In particular we've seen coverage about A+ programs being limited, Lahainaluna boarding programs. What are the real ramifications? What are people going to see?
Matayoshi: Well I think one that many parents will see right away is that the A+ program general fund support was eliminated, and right now parents do pay $55 a month for their child to attend an A+ program at elementary school level. We will be proposing to increase that to $80 a month in order to cover the costs of the program and keep it going. Without that increase, I'm afraid that many A+ programs will not be able to survive, and that service will no longer be available to parents. So that's something. . .
Waters: So $55 to $80, that's 50 percent or roughly thereabouts increase.
Matayoshi: It's not insignificant.
Waters: Will people be able to pay that, do you think? What's your sense of that?
Matayoshi: It's hard to say. If you went to other schools, private schools, you look at the amounts that they pay for after-school care, and it is significantly more than $80. So that pare is. . . it's a good deal. It doesn't mean that it is something that parents can afford, but nonetheless it's a pretty cost effective program, very efficient program. So we're hoping that they will be able to continue. Anytime you increase prices, you look at potentially reducing the numbers of people that can access the program. Free and reduced lunch students do get subsidized from DHS, the Department of Human Services. So that will remain, we hope. It's only the fee-paying students that are affected.
Waters: Any other ways, any other things that we can look for?
Toguchi: Well some of the other programs that were cut completely through the budget were things like the Challenger Center. It's a very sophisticated program that by and large gets support from anybody that's been through it. And the Board fully supports it, but when it comes down to the kind of decisions we have to make, that was one of those programs where we felt that a lot of schools would continue to support. Now the interesting thing is that the Challenger Center also gets a lot of private school students going through the program. And everybody goes through the program for free right now. So you know their budget is relatively small, a few hundred thousand dollars. If that is spread around, through all the people that participated in that program there's no question that they can continue. And that's the kind of thing that the department and the schools will have to consider before the year starts so that they can be up and running by July 1.
Waters: And what about. . . where did we end up with Lahainaluna boarding students? What was the resolution on that?
Matayoshi: The Lahainaluna boarding program was not cut from the budget. And so they have very strong support from their legislators, strong support from their alumni, and so they are not included in the budget reductions. They remain as they were before.
Waters: Okay. Any other things on the school level that we should talk about that people can. . . need to brace themselves for so to speak?
Toguchi: Well you know, as the year goes on we're still going to see a lot of shortfalls in things like student transportation. We didn't get an increase in student transportation, so we'll probably start the year off at maybe $20-30 million short if we project out the full year based on our current services. So we have those kinds of areas, student transportation, utilities where we're going to experience shortfalls and that money is going to have to come from somewhere. Typically we were able to fund a lot of those shortfalls through surplus funds that we got from the Department of Defense and from the Federal government. Those surpluses have been diminishing, so we don't anticipate being able to fully fund that kind of shortage. But one of the other things that we have to do is look at whether or not all of those services need to continue to be provided. Can we scale down? (Waters: . . at the same level they are done right now. ) Are they high priority areas?
Waters: What about at the state and complex level? You know we always talk about how we want to try to affect the school budgets the very last. So what about at the admin level? Any cuts came in that area that we can point to that are significant?
Matayoshi: Most of the budget cuts really did come from the state office and the complex area levels. The Office of Human Resources had a 10 percent across-the-board reduction. They need to figure out how they are going to meet that reduction number. The Office of Information Technology was a 5 percent across the board budget reduction. Both really important offices. We're mostly people. That's our budget, so Human Resources is really important. And we were really looking for technology to help us become more efficient. So we're going to have to do the job, and we're going to have to figure out how to do it better. In other areas, as the chair mentioned there were 6 percent or 5 percent reductions. And so people will need to look at how they can meet that reduction. It may mean a reduction in force; it may not. The legislature left it to us to determine that portion of it. And so that's the process we're in the middle of right now. We hope to have more fully developed plans in the next week or two on how we'll implement the budget.
Waters: How about from the Board? Did you guys take a salary cut? (smiling, since members receive no salary)
Toguchi: In a sense we did. We don't get a salary, of course. But we reduced the number of meetings we have, to be able to live within our budget. So whatever contributions we could make to help with the reduction of the overall budget, that was done. But one of the other things to consider is that going into this year we already took probably about $100 million reduction over the last 3-4 years, $80 million in this biennial from the last legislature, about $20-30 million in the year prior to that. So with this $35 million reduction we are looking at really about $150 million reduction on an annual basis. And that's going to impact schools. Again, it's not real clear how that is going to impact because those cuts really went into effect this past school year and now with the increase the reduced staffing levels that we had are going to have even less to work with to support schools. So moving forward we're going to have to work with it. One thing about educators is that they figure out a way to work with what they have, and we just hope that it's not going to severely adversely affect our ability to educate students.
Waters: So what will be coming in the next few months? The Council on Revenues meets at the end of this month -- this is in May. And the Governor has until July 6 to sign, veto, or to allow the bill to become law without her signature. So what can we expect beyond today?
Matayoshi: Well, we'll be watching for the Council on Revenues report. Clearly, if it is more negative, there is a potential for additional restrictions that the Governor may place on us. If it's more positive I'm not so sure we're going to get money restored because the legislative process is done. One of the interesting things that we look at the Council on Revenues is that the overall economy seems to be coming back. But you'll have an event like the volcano in Iceland that will reduce air travel. And that directly impacts our tourism industry, and if it does impact our tourism industry then the general fund revenues drop. So you know this really is a global economy and when we look out at the news and we think, oh well, that's way over in Iceland, that's not true. We're all affected by events around the world. So we are watching for that Council on Revenues as the local indicator of our economy. We're watching for it pretty closely.
Toguchi: From now until over the next few months the Department really has to take a look at the budget reductions and see how it is going to be able to operate the Department efficiently without negatively affecting operations at the school level. Of course we're still trying to work out trying to increase the number of school days we have. So there's a lot of things that we need to be done as soon as possible.
Waters: And we're going to talk about furlough Fridays before the program ends. But before we move to the next topic, [are there] any misconceptions that have been floating around out there -- there's been a lot of coverage and a lot of talk about public education and school funding -- that you would like to correct? Any facts that you've heard? Or strange rumors that you'd really like to set the record straight on? This is your opportunity.
Toguchi: I think the most important thing is to realize or to continue to publicize is that public education is not that bad as the Governor, Lt. Governor, and staff make it seem. Yes, we have a lot of weak points and we are working on those points, but when you look at the overall trend of student achievement, it's been going up in Hawaii. We've had a short drop in our NAEP scores for one particular grade level. But if you look at it over time, all scores have been going up. We have schools that have been improving drastically, not just incrementally, but drastically. So you can see that standards-based education has been making a difference that the faculty with the staff development and the time to meet with other teachers and meet with parents of students. Those kinds of things are making a difference, and we just need to continue that. Now obviously having less school days reduces the amount of time to be able to do that, and that's going to affect us.
Waters: I was going to ask how furlough Fridays will impact those scores.
Toguchi: However I think that one of the things that Hawaii's political leaders can do to support public education is start to recognize the positive aspects of it: the good things that have happened, the positive trends, the areas of success because it's not fair to trounce on everybody in the system when there are a lot of good things going on.
Matayoshi: I actually had one that I was thinking about and that's that many people seem to think there's a huge overhead, there's a huge amount of overhead in the Department. And when we looked at the budget reductions we looked at how much is allocated to what would ordinarily be termed overhead, it's really under 5 percent of the budget which is very, very low. Now there are services that are centralized, but they are direct services to the students like cafeteria food services, bus services. Those are direct services to students that are in a centralized budget, but I would not consider them overhead. And so when we look at it and say "well it's the bloated bureaucracy," I think we really have to reassess that and say "wait a minute." We may not be the most efficient. There's lots of room for improvement. But the total dollars spent and the total bodies in those functions is not really excessive.
Waters: I'm glad you brought that up because that is a constant criticism because you hear "too many state offices," "too many bureaucrats" or etc. Let's talk a little bit for a few minutes about Race to the Top. Last time we had you here, we had just submitted our application, and then shortly afterwards we didn't make the cut for the first time, which you actually indicated might happen on that program. So can you tell us a little bit how we fared, because we didn't fare too badly, even though we didn't make the first cut and tell us what's happening with Race to the Top II.
Matayoshi: Well, we ended up being 22 out of 41 states, and it sounds like we're middle of the pack. We were only 40 points out of 500 points that could have been awarded, out of being a finalist.
Waters: So we barely missed the cut-off.
Matayoshi: I think that's really positive. We were very concerned that the furloughs would impact the overall evaluation of our proposal. We had very positive comments from the evaluators, including one that I find very interesting. They say we very honest about the areas we were weak in, and our efforts to improve were sincere. So I think that was a good sign that we were really on the right track, because we really are looking at the Race to the Top application as not just the end game. We are looking at it as a starting point for overall reform. So we are looking at what is realistic for us. Right now we are in the final month of the application preparation process again. The second round is due June 1st. So we should have a final draft completed for the Governor by the middle of May, and our teams are working really hard on it again.
Waters: When will they announce the next round of selected schools?
Matayoshi: We expect that the finalists will be called to Washington to defend our proposal in early August with an award in September. They need to get the funds out the door by the end of the federal fiscal year at the end of October, so it's a very short timeframe.
Waters: So it sounds promising that we rated fairly well, our proposal was ranked highly, and that you had positive feedback from the evaluators. So maybe, is that a case of where the evaluators are truly trying to help the school systems who have what it takes to receive the money move up the scale. In other words, it's not an adversarial thing, but they're really trying to identify and help those who were on the verge of making it.
Matayoshi: I think they were really trying to identify places where they felt we were weak or it wasn't clear, or we could have been more bold. They identified those for us and now we are able to pin-point our efforts and make decisions about whether or not we want to do the things that they might find more appealing. There are some things that we won't want to do because it's not right for Hawaii. And I think we have to really carefully balance the effort to get as many points as possible with the fact that what we really want is something that works for our kids, that we're not just going to go for some amount of money regardless of the impact on the schools. So we've been working hard on evaluating each of the comments. We've had a series of meetings with the teachers' union and our principals' union and it's been great to have that open conversation about what needs to be fixed, what the concerns are from our point of view, and what concerns are coming from the Federal government on a nation-wide level. It's been a very positive experience to engage with everybody. We've also been going out and speaking a lot with community members trying to get people to understand what this means for the state, what it means for education, and to bring back a little bit of the sense of excitement and energy around education reform. I like to think that as we're moving forward this will be a place where we can channel the energy from furlough Fridays, the anxiety, the anger, the energy towards a positive change for the department, because if there is a silver lining to this, it's that parents and communities have really come around to say "Wait a minute. Public education really is important to us. Don't take it for granted. Support it." And if we can turn that energy into something positive and force us to do some of the things that are hard to do I think that that would be a good thing.
Waters: I'm trying to take a page from Chairman Toguchi's suggestion that we be more positive and celebrate the accomplishments. And that's a valid viewpoint because there are some good accomplishments out there. So let's in the remaining moments of the show, talk about furlough Fridays, and just to remind everybody, furlough Fridays started when all the departments last year were asked by the Governor to take cuts and furlough Fridays was what we ended up with in the DOE as a result of those cuts. Many of the parties have since said that was maybe not the best thing to do and it certainly has been a catalyst because it really has gotten people talking about what's right for our public school system. So Garrett, I guess I'll ask you to set the stage for us. What happens now the legislature has put its plan forth. It's on the Governor's desk. Now what's the next step?
Toguchi: Really the law authorizes the Department of Education and the Board to renegotiate with the HSTA and the other unions, which we did. And we have an agreement which all parties which are part of the agreement need to agree on. So we have an agreement with the HSTA. We still need an agreement with the UPW and HGEA to be able to implement this proposal.
Waters: Take the money that the Legislature appropriated...
Toguchi: ...and restore school days. Right so, literally all that is needed now is for the Governor to say I'll release the money that was appropriated by the Legislature because that allows us to start to, number one, let the schools know we'll have a full school year; and number two, work to put back in place those things that we need to to make sure that all of our employees are going to be at work at the right time, make sure that all of the contracts that we need to adjust are done. It's not something you can just turn on and expect people to return to work tomorrow. You know there's a lot of logistics involved whether it's at a school level or at a state-wide level.
Waters: Okay so, can we expect that the Governor will do that?
Matayoshi: Well, we are hopeful, and I think the first step is that she needs to sign the bill so that that portion with all of the technical stuff is done. And then, we need to complete our agreements she would release the funds. Again I would echo what Garrett has just said. You know teachers and principals are asking us "When is this going to be resolved?" because there's a lot of planning that goes into the next school year. And you know having it happen late... July 6th is the deadline for vetos. That's less than a month before school starts. And teachers and principals plan ahead you know, for all of their lesson plans, and what's happening in terms of excursions or trips or training or lots of things that happen during the course of a year. And so if they have extra days they want to know and plan accordingly. So we are really hoping that we can get something sooner rather than later. I would love to have something this month. I would love to have something this month. So that before school ends, before this school year ends the students and teachers and principals, all of the staff, know next year is a regular school year. It'd be great to end the school year that way, so I have my fingers crossed. And we are working hard to see if that can happen.
Waters: You mentioned before, we were talking before that start of the program, that one of the issues you wanted to address was the essential versus non-essential employees. That there was a lot of confusing rhetoric going on about that, and that's a part, an outgrowth of the furlough Fridays issue, so can you talk a little about what you meant by that?
Matayoshi: Well, I think it's been really hurtful to employees in the department to think that someone is essential and the other person is not essential. Everyone is doing their best. Everyone is needed, and has a role to play in the education of the children. So just the terminology of essential/non-essential I think has been hurtful to morale in the department. The other thing is that I was not involved last year when Pat Hamamoto was still Superintendent, but I know that one of the things that came up was a request to come up with a list. The Governor had asked "Tell us who is essential and non-essential" and gave a definition. Their staff provided a definition for "essential" and I believe the department was trying to respond to that in the spirit of negotiation. It was not a list that was agreed to by anyone. And so I think it is very unfortunate to have it released publicly because it then created that "you're essential, but you're not." It was not agreed to. It was not an agreed to list and that was back in November. So that continues to come up. It's something that divides us. And in these really difficult times, I think we need to be more than ever united in looking at what's best for the kids. What's best for our students. What will help them achieve. I don't like to see that kind of division within the department. It makes it hard.
Waters: We just have a couple of minutes left, so I'd like to allow you each 30 or 45 seconds to offer some closing comments. We've covered a lot of territory: the budget, Race to the Top, and furlough Fridays. And we realize a lot will be happening in the coming months in regard to this. But closing thoughts at this point...
Toguchi: Well, I think these past few years have made us very aware that financing for education has to be different. We cannot just rely on the general fund or basically the G.E.T. We have to be able to develop a diverified income portfolio to allow schools to weather these types of times. Other school districts on the mainland have a variety of alternative financing mechanisms. Some of them have land trusts that they can tap into. Some of them have dedicated surplus funds. Some of them have, of course, their own property taxes that they can issue or bonds that they can sell. The Department of Education has none of that. We just receive money from the Legislature. So one of the things I'm disappointed in is this year the Legislature did nothing to look at ways to provide alternative financing for education. And that's going to be a problem that we are going to face in the future if we don't address it now. So that's something we need to start looking at before the next storm comes.
Waters: Well, we'll be keeping an eye out for that. And Kathy...
Matayoshi: I think just two things: focus. With the limited resources, we really need to be focused on the things that make the most difference for the children. And the second is communication. Programs like this, other ways to get the word out to a work force that's anxious, and students and parents who are anxious. Ways to communicate and get that information out are going to be more important than ever.
Waters: And speaking of communication, I neglected to mention, that we do have a web site and the email address and they are hawaiidoe.org. That's the Hawaii DOE's web site, hawaiidoe.org. And you can email us if you have questions or future topics that you'd like to cover at email@example.com. Thanks for watching. Thanks Kathy and Garrett. Thank you for watching and aloha.
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Narrator: A high school diploma can open doors to greater opportunities. That's why Waipahu Community School partners with Hawaii National Guard to provide high school diploma program. The program is called Youth Challenge Academy.
Student #1: The classes are challenging but it's worth it.
Student #2: The classes are tough, but I learn a whole lot.
Student #3: After getting my diploma, I was able to get mea really good job.
Narrator: Thanks to Waipahu Community School for helping to make our high school diploma program a success.
A production of the Hawaii State Department of Education Office of Curriculum, Instruction, and Student Support. 2010.