Department of Education Faces $12 Million Budget Shortfall

Governor Neil Abercrombie has announced that all state departments will continue to face a 5 percent reduction in discretionary spending for the coming fiscal year.  The governor stated in a memo, "At this juncture, we are very optimistic about the recovery of Hawaii's economy, but we remain cautious about its sustainability in the face of numerous uncertainties.  In this light, and in consideration of the many demands on our limited resources, we must continue to be prudent with our expenditures."

For the Department of Education this equates to a $12 million unexpected budget shortfall, leaving board members concerned that the school system may not be able to pay for all of the costs for utilities, bus transportation, school lunches and substitute teachers.  The DOE received a total of $1.4 billion from the state budget, but was not aware of this $12 million cut.  Kathryn Matayoshi, the Schools Superintendent, stated, "This is another quite significant action that we will need to work on and deal with."

Matayoshi and other DOE board members will be meeting with Kalbert Young, the state Budget Director, to try to come up with a plan to make up the difference.  Young stated that the 5 percent withholding will affect all departments in an effort to raise a contingency reserve fund for the state.  Young added, "Should revenues fall too much or the state come under financial hardships, the state needs to have something to react or respond with.  The DOE is saying this could be more impactful than they can accommodate.  I'm open to seeing the financial analysis and financial management analysis for their budget. If there are programs that will be detrimentally impacted, the purpose for the restriction is to provide contingency reserve funding, and this could qualify. That's what it's there for. But to do so, I would have to consider the overall impact to the state."

Source: Honolulu Star Advertiser, 7-5-2013, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Broker-in-Charge, REALTOR®
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