Analyses of Proposed Special and Revolving Funds 2026

Section 23-11, Hawai‘i Revised Statutes requires the Auditor to analyze all legislative bills introduced each session that propose to establish new special or revolving funds

Hawaii State Auditor’s Report No. 26-07, March 2026 (excerpt)

SECTION 23-11, HAWAI‘I REVISED STATUTES (HRS), requires the Auditor to analyze all legislative bills introduced each session that propose to establish new special or revolving funds.  Specifically, the Auditor’s analysis of each bill must be based on the following criteria:

1. The need for the fund, as demonstrated by:

a. The purpose of the program to be supported by the fund;

b. The scope of the program, including financial information on fees to be charged, sources of projected revenue, and costs; and

c. An explanation of why the program cannot be implemented successfully under the general fund appropriation process; and

2. Whether there is a clear nexus between the benefits sought and charges made upon the program users or beneficiaries or a clear link between the program and the sources of revenue, as opposed to serving primarily as a means to provide the program or users with an automatic means of support that is removed from the normal budget and appropriation process.

We sent surveys to bill introducers requesting information about  the proposed funds, including the need for the fund as set forth in  Section 23-11(b)(1), HRS, and nexus as required by Section 23-11(b)(2), HRS.  Our review included any survey responses received and statutory criteria.

For any new fund proposed, additional administrative costs associated with the fund may be incurred by central services agencies of state government.  Undetermined amounts of revenue will be deposited into the fund and will not be subject to normal lapsing requirements.  From a legislative perspective, special and revolving funds are less desirable because the funding stream is not fully controlled by the appropriation process.  Legislative control is reduced because special and revolving funds divert moneys from the General Fund and distort the State’s financial picture by making revenues and expenditures appear to be less than they are. 

We reviewed 76 House and Senate bills introduced during the 2026 legislative session, proposing 52 special and revolving funds. None of the proposed funds satisfied the criteria set forth in Section 23-11, HRS, for special and revolving funds. 

See Report No. 25-05, Analysis of Proposed Special and Revolving Funds 2025, for our analyses of new special and revolving funds proposed by bills introduced during the 2025 legislative session.

Exhibit 1 summarizes the result of our analyses.

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