New school facilities agency for Hawaii would dodge legal safeguards

A proposal to create a new state agency to build and renovate public schools is moving forward with broad backing at the Legislature despite concerns that the agency would be exempt from various safeguards in the law.

The School Facilities Agency would be responsible for development, planning and construction of capital improvement projects at public schools. It would take over that job from the Department of Education and have wide discretion in its work, as outlined in Senate Bill 3103, SD 2.

The agency would be exempt from all county ordinances other than building codes, as well as from state laws on historic preservation, environmental protection, budgeting, civil service and parts of the procurement code and Sunshine Law.

Instead, the agency is supposed to adopt rules “substantially similar” to the environmental impact statement law as well as “transparency initiatives … to deter fraud and malfeasance and allow for public input,” according to the bill.

The proposal is backed by a powerful coalition of legislators, Gov. David Ige and organizations such as the Chamber of Commerce, Bank of Hawaii, Hui for Excellence in Education, Pacific Resource Partnership and Aloha United Way.

“Moving quickly to give our keiki the greatest advantage requires nimbleness and a willingness to embrace innovation and new ideas — both of which can be achieved by an independent School Facilities Agency,” Linda Chu Takayama, the governor’s chief of staff, testified.

Proponents see the agency as a way to expedite building modern schools and redeveloping old properties without bureaucratic delay. But the proposal came as a surprise to schools Superintendent Christina Kishimoto and has set off some alarm bells at the State Procurement Office, the Budget and Finance Department, public worker unions and watchdog organizations.

“It is unclear why this agency and board or any state and county agency or board should be exempt from laws that are in place to protect the public’s interest, health, safety, welfare and our islands’ finite and fragile natural and cultural resources,” the nonprofit Hawaii’s Thousand Friends wrote in testimony.

Architect Lorraine Minatoishi asked legislators, “Why should our schools — institutions that should be the beacon of doing things the correct and proper way — be literally built on deregulation and lack of oversight?”

The new agency would be able to make and execute contracts, acquire or condemn property, construct or reconstruct any project, hold title, sell, lease and dispose of any project. It could issue its own bond financing and enter into public-private partnerships.

The governor would appoint its executive director and five members of an advisory School Facilities Board, which would also include the schools superintendent and a representative of the Board of Education.

Sen. Michelle Kidani, who chairs the Education Committee, said the new, streamlined approach is needed to get students the facilities they deserve sooner rather than later. She expressed frustration with the lack of progress by the Department of Education on Act 155, a law passed in 2013 that aimed to generate revenue from underused school property to modernize and improve schools.

“The time has long come for us to move forward with Act 155, and I think the best way to do it is with the School Facilities Agency,” Kidani said in an interview. “This helps with the Department of Education because now the superintendent and everyone can concentrate on the students’ learning and curriculum, etc.”

Her committee removed a reference to “repair and maintenance” in the bill, which Kidani said referred to minor everyday repairs. Still the agency’s mission would cover major school renovations that require capital improvement funds, she said.

“Hawaii’s public school facilities continue to face a number of infrastructure challenges with some facilities reportedly over 100 years old,” the Chamber of Commerce of Hawaii testified. “This bill would help to provide mechanisms to process capital improvement projects in a timely manner in order to address these challenges. As learning and student skill-sets evolve, it is imperative that their learning environments evolve with them.”

The bill is poised for passage by the full Senate and has broad support in the House, with 45 of 51 representatives listed as sponsors on a companion measure.

Kishimoto said in an interview that neither she nor the Board of Education was included in developing the proposal.

“This was really unexpected,” she said. “Anything that happens with the public education system needs to include its chief educational officer. Otherwise you undermine the public educational system as author of its design and its innovation, and you undermine the kids, families and communities.”

State Budget and Finance Director Craig Hirai submitted testimony to the Ways and Means Committee with a host of questions, including how the new agency would comply with Internal Revenue Code restrictions on private use of school facilities; how it would be funded and spend money since it would be exempt from state budget processes; how it would coordinate with DOE on school facility requirements; and who would determine what projects are needed and set priorities.

“Educational program requirements drive school facility needs, but this bill is silent on this critical issue,” Hirai wrote.

The State Procurement Office warned in its testimony that “in general, construction projects exempt from the code can be very problematic in maintaining public trust in the process.” Rather than a wholesale exemption, Administrator Sarah Allen suggested amending the procurement so the state’s chief procurement officers, such as the superintendent, can make exemptions case-by-case when procurement is not practicable or advantageous to the state.

Instead, the Education Committee amended the bill to specify that professional service contracts — for engineers, architects, surveyors and landscape architects — follow the qualification-based selection that is outlined in the procurement code.

Construction contracts with the new agency, however, would not be subject to the procurement code. Subcontractors would be identified to prevent “bid shopping,” Kidani said.

“What we are trying to do is make sure that we go out and get the best possible deal we can through the contractors and then get it done on a timely basis,” she said.

Kishimoto said her department’s efforts to maintain and upgrade school facilities are slowed by the lack of flexibility in the statute, and added, “Give me that flexibility, and I can do plenty with that.”

The Education Committee amended the bill to make the School Facilities Board subject to the state open-meetings law, also known as the Sunshine Law, but left in language that allows it to dodge those requirements with subcommittees and work groups.

“As a practical matter, all substantive policy work of the School Facilities Board will occur in secret if subcommittee and working group discussions all occur outside the Sunshine Law,” said Brian Black, executive director of the nonprofit Civil Beat Law Center for the Public Interest.

Public worker unions strongly objected to the exemption from civil-service rules in the bill, which the United Public Workers characterized as “privatization at its fullest.”

The legislation includes a $1.5 million appropriation to get the agency rolling.