Idle DOE Funds

by Tom Yamachika, President, Tax Foundation Hawaii

This year, much of our legislative session is going to be about finding enough money to counter massive cuts in federal funding that we used to depend on.  New credits and incentives are going to be a tough sell.  We will be fighting hard against new “revenue raisers,” i.e., taxes, that are certain to be proposed this session in spite of it being an election year.

At times like these, we really need to wonder why state agencies are hoarding millions of dollars.

Here’s an example.  In a recent report filed with the Legislature, our Department of Education reported on its “administratively created” special funds.  These moneys are held back from its regular budget for various reasons.  If it were not for reports like this one, even legislators would not know about this money.

The “Donations – Facilities” fund, for example, receives fair share contributions and school impact fees, which we have written about in detail before.  There is a $32 million balance in this fund.  It receives revenues but has never had any expenses.  DOE projects that the fund will continue to grow to $42 million by the end of fiscal year 2028.

DOE also has an “Agency Fund.”  “This trust account exists to allow schools to collect and expend funds for co-curricular activities,” DOE states.  Co-curricular activities include inter-scholastic athletic, speech and forensic contests and math league activities, marching band, concert band, cheer and song leading squads and drama group activities.  Sometimes these activities cost some money, and parents are asked to kick in a few dollars here and there.  So, fund revenues include school registration fees, field trip fees, fundraisers, club dues, sport team concession revenue, athletic activity books, yearbooks, uniforms, student association or student government dues, class dues, and other authorized fees.  The revenues and expenses reported in this fund show that revenues are comparable to but consistently exceed expenses, which is probably how it should be.  The problem, however, is that the fund has a balance of $30 million. 

Then, there is the “Foundations & Other Grants – Operating” account.  “This fund was established in 1961,” DOE writes, “to account for grants received from foundations, other non-profit organizations, and other State agencies for various projects that benefit the schools and the students they serve.”  As with the Agency Fund, revenues are about the same as expenses.  But there is an unencumbered balance of $9 million.

The “Donations – Operating” account seems to be similar.  It was also established in 1961, and it accounts for donations made to the schools for specific purposes.  It seems, similar to the previous fund, that the donation that goes into the fund is supposed to pay for something, the expense for which comes out of the fund.  So, revenues are comparable to expenses.  This fund has about $4 million in it.

We conclude our coverage today with the “OLELO - Educational Program Public TV” fund.  The DOE receives a piece of the franchise fees from Hawaii cable TV subscriptions.  “This funding is used to support the University of Hawaii, the Department, Hawaii Association of Independent Schools, and Hawaii Schools Digital Media Grants, as well as to identify and seek additional resources at federal, state, corporate, and foundation levels to support enhanced use of information and telecommunication systems and services in education,” DOE says.  As with some of the other funds discussed above, revenues are comparable to but consistently exceed expenses, and the fund has built up $3 million

How about that, lawmakers?  Can we put $80 million to good use instead of just allowing it to sit idle?