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Monday, October 26, 2009
HGEA vs HSTA: The coming legislative budget crisis
By Andrew Walden @ 8:27 PM :: 6974 Views :: Energy, Environment

by Andrew Walden

In the HSTA/Kanu Hawaii playbook, Furlough Friday, October 23, 2009 was supposed to be the day they seized control of the debate on how to solve the Hawaii budget crisis.  The Legislature was supposed to announce that they had a majority of both houses lined up to demand a special session. 

But other government employees' unions got in the way. 

House Speaker Calvin Say October 24 explained:

"Parents and the public, however, should be aware that public education is one of several priorities that will be adversely impacted by the budget crisis. Other state services and employees will suffer because of furloughs and, possibly, layoffs. The Legislature must also consider those state services and employees."

Government contractors also have a cozy relationship with the legislature.  The capital improvement projects they bid on depend on the State's ability to sell bonds al favorable interest rates.  if the bond rates go up the amount dollars spent on projects will go down sharply.  Say explained:

"If the hurricane fund is depleted, interest rates on those bonds may increase, requiring higher annual debt repayments.  Moreover, the hurricane fund has no revenue source to replenish itself. Because of this, the use of the hurricane fund would not be a long-term solution."

Democrat Star-Bulletin reporter Richard Borreca actually wrote a piece debunking the "its all Lingle's fault" meme being pushed by the HSTA and DoE.  He explained October 25:

Gov. Linda Lingle said in a written response to questions that the state's first plan in 2008 was for the unions to take a graduated pay cut. Those earning a lower salary would take a smaller cut of between 1 and 3 percent, while those in higher brackets would take cuts of between 6 and 8 percent.

That was rejected by Dayton Nakanelua, the United Public Workers executive director. Lingle said Nakanelua "first suggested that the state consider furloughs."

So furloughs were a UPW suggestion.  Ironically the UPW is the only union which has forced arbitration so far.  Then Lingle's negotiator left all the Democrats in a room together and here's what they came up with:  

State chief negotiator Marie Laderta (on July 6) walked out of the meeting to protest that the unions had not come up with a formal proposal, but the other state employers -- the University of Hawaii, the schools, the courts and state hospitals -- remained.

After Laderta left, the federal mediator kept all parties in the building and worked out an agreement, although it was not a settlement.

"It was going to be a furlough plan," Randy Perreira, Hawaii Government Employees Association executive director, said during an interview last week. "Not all the details were worked out, but it was going to be a furlough."

So the Democrats all got together in a room and came up with furloughs--and it is the HGEA boss who goes on the record to explain this: 

Because of that broad agreement, the issue of furloughs for school teachers represented by the Hawaii State Teachers Association was never really questioned, according to those involved with the teacher talks.

The Board of Education rejected layoffs early on because cutting teachers would mean that class sizes would increase, said Garrett Toguchi, board chairman.

But Toguchi was vague about the decision to furlough versus just cutting worker pay, saying the actual negotiations were confidential.

"I can't tell you why we didn't go for wage reductions or holidays," he said.  (Wow.) 

And that last quote confirms everything Randy Roth has said about the BoE.  Roth writes in, In Hawaii Education, The Buck Stops Nowhere:  "When each of three parties has a hand on the steering wheel, each can blame the others for missing the hoped-for destination. As a former Superintendent once put it, 'When everyone is in control, no one is in control.'” 

And in fact the BoE/DoE/Legislature/Governor circular firing squad has been blasting away--each blaming the others for the DoE/HSTA choice to place all 17 teacher furlough days on instructional days--a choice which the DoE and HSTA likely felt would maximize the pressure for tax increases to feed the DoE budget.

This brings us to Governor Lingle's October 23 announcement.  She intends to place before the Legislature a proposal for a constitutional amendment which would remove the appointment from the Superintendent of Schools from the Board of Education and place that responsibility in the hands of the next Governor. 

Lingle's proposal was immediately endorsed by Democratic Gubernatorial candidate Rep Neil Abercrombie.  But signs of resistance can already be seen on the Legislature.  Most notably, Sen Norman Sakamoto, a candidate for Lt Governor, brother of a major DoE contractor, and chair of the Senate Education Committee, laid the groundwork for his opposition to the constitutional amendment by suggesting that the Governor should immediately begin including DoE Superintendent Pat Hamamoto in Cabinet meetings. 

UPDATE: Honolulu Advertiser joins Sakamoto's call  (Analysis: Cabinet meetings are between the Gov and her appointed department heads.  Hamamoto is appointed by the BoE.  The Advertiser is trying to shift the issue from a substantive constitutional change--having the DoE Sup't be appointed by the next Gov -- to a symbolic change--having a DoE Sup't still appointed by the worthless BoE sit at the Cabinet Meeting.  Changing the constitution will create clear lines of accountability.  Having Hamamoto sit in on cabinet meeting will just create more chaos and excuses for failure.  Apparently Adv Editors think voters are too stupid to spot the deceit.)

Demanding inclusion of a non-appointed official in a meeting of the Governor's appointees is a red herring designed to create an excuse for Sakamoto to oppose--or even use his committee chairmanship to block--consideration of the proposed Constitutional amendment.

Why would someone with close ties to a DoE contractor want to prevent moves to establish clear lines of accountability in the DoE?  The Hawaii State Auditor explained it best in 2009:

"Our audit revealed a lack of proper leadership and controls over the department‘s procurement process and a resulting indifference toward procurement compliance … The department lacks corrective or disciplinary procedures for procurement violations, and the Board of Education has not [provided] oversight of procurement. The result is much confusion among employees and dissent within the department over proper procurement policies and procedures. … The office‘s many large-dollar capital projects were commonly procured with minimal planning and oversight. … The department has not maintained effective internal control [and] lacks required monitoring controls over its internal controls.

"The second phase of our audit revealed an organizational culture of disregard for procurement rules …. We encountered numerous instances of department personnel manipulating the professional services selection process and awarding contracts to predetermined consultants. … We discovered several other alarming practices … that appeared to be fraudulent and unethical."

As with everything that is happening in these budget and labor negotiations, the 2010 gubernatorial election is front and center.  The competing Democratic factions feature Cayetano backing Abercrombie and Case against Hannemann and Hanabusa. 

If the HSTA chooses to support making the DoE an appointed department of the State, they will find themselves at odds with the DoE contractors who are now with the HSTA in demanding more money for the DoE. 

On the other hand, the HSTA could form an alliance with the HGEA to back the constitutional amendment on the theory that ending the circular firing squad and handing the next governor primary accountability for the DoE would lead to substantial housecleaning of contracting fraud, waste, and corruption.  It would be unions vs contractors instead of the current order of battle which reads: HGEA vs HSTA and the DoE contractors.  The savings could easily pay for eliminating all the furlough days and more without adding a penny to the contract--but of course the HGEA will want to make sure its units get a cut of the action.

The HSTA and HGEA could both mitigate the impact of the constitutional amendment on contractors by abandoning their efforts to grab the Hurricane Fund.  By keeping the Hurricane Fund in place Hawaii is able to sell bonds at low rates in order to finance capital improvement projects.  These projects are the lifeblood of all of Hawaii's major contractors.  A raid on the Hurricane Fund would mean higher interest rates on Hawaii bonds which means fewer bonds would be issued.  The resulting reduction in work could be more damaging to contractors than reduction of fraud, waste and corruption within the DoE.

Of course if there were a popular force in politics--an electoral bloc tied to the interests of the middle class, not special interests such as unions and contractors--then the logical solution would be obvious.  Leave the Hurricane Fund alone, don't raise taxes, make the DoE an appointed department of the State, abolish the BoE, and make every school a charter school.  Those steps would eliminate furloughs and make Hawaii into an education powerhouse.

Tax increases are an answer which rolls easily off the tongue for those who have no responsibility.  But the truth is that increases may very well reduce revenues, not increase them.  The legislature in its last session raised the income tax, the TAT, and the barrel tax--and revenues keep plummeting.

But everything in recent Hawaii history points to legislative Democrats once again seeking a solution based on some type of consensus amongst themselves.  It is likely that the UPW and possibly the UHPA arbitration decisions will fall into the laps of the Legislature next session.  They may also have to contend with a ruling by Judge Ezra which invalidates some or all of the school furloughs.  "Consensus" is a necessity for the continuance of the Hawaii Democratic Party.  How will all four government employee unions be fed, while not goring the ox of the contractors?

The only ideas Democrats have put forward are more tax increases and raids on special funds.  There has been a substantial effort to keep waste, fraud, and corruption within the DoE out of the political conversation. 

Thanks to the continuing decay of the Obama economy, "consensus" is going to be very hard to reach this session.  Lingle won in 2002 after Cayetano alienated the unions under pressure by another economic recession.  Voters may again turn toward the non-Democrat--Duke Aiona--to provide four more years of badly needed adult supervision.

---30---

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