The end of furlough fridays

Rep. Tom Brower took this photo of Speaker Calvin Say addressing the media and audience during the press conference to announce the end of teacher furloughs. The Governor outlined a 4 part plan:

1. Use of SB2124 passed by the Legislature to use the Hurricane Relief Fund. She plans to release $57.2 million of the $67 million appropriated.

2. Use of federal ARRA funds, $2.2 million, for charter school furloughs.

3. Teachers agreed to give up 6 planning days.

4. Banking community agreed to authorize a $10 million line of credit, interest free, if needed.

Tapping the Hurricane Relief Fund for Education

Photo: Hawaii Education Matters

The legislature passed SB2124 authorizing $67 million from the Hawaii Hurricane Relief Fund to end the public school Furlough Fridays for next fiscal year beginning July 1, 2010. The DOE, BOE, HSTA and the Governor must agree on the amount to be used, but the legislature did its part in making funds available.

The use of the Hurricane Relief Fund, which currently has a balance of about $180 million, is appropriate. Here’s why:

· The Hurricane Relief Fund, which was attached to the Department of Commerce and Consumer Affairs, is no longer an active program. The mandatory annual contribution by property owners into the fund was abolished in 2001.

· People frequently ask, “What happens when we are hit by another hurricane? We need the money from the Hurricane Relief Fund to help with disaster relief.”

· The Hurricane Relief Fund was originally created after Hurricane Iniki, when private sector insurance companies ceased offering hurricane insurance. While the fund once served to provide hurricane insurance to Hawaii's mortgage holders, the re-entry of private sector insurance firms into the hurricane coverage market has negated this need. The fund no longer provides insurance policies, and moneys currently left are no longer needed to provide this service. While some may believe the fund is supposed to be used for reconstruction in the wake of a future hurricane, this is not the case.

· What about people who paid into the fund in past years? Shouldn’t they get their money back? The answer is “no.” Like any other insurance policy, once the policy ends, the insured does not receive back the amount of the premium.

· The fund balance, according to statute, should be transferred to the general fund. However, the current insurance commissioner has testified that the funds should remain in place in case the program needs to be reactivated in the future.

· Provided the $67 million from the fund is spent to end teacher furloughs, there will still be a balance in excess of $100 million, which is more than enough to reactivate the program, if needed.

· The balance is considered one of the state’s reserves, and plays an important role in qualifying Hawaii for a strong bond rating.

· While no one wants to tap into the fund if possible, most agree that the Furlough Friday situation is serious enough to warrant setting money aside from the Hurricane Relief Fund. Also, it doesn’t tie up general fund money that could be used for other worthwhile programs in case the parties are unable to reach agreement on the teachers’ contract.

House Majority Position on Teacher Furloughs

Speaker Calvin Say issued the following statement this afternoon following the Majority Caucus. It confirms the House position after the breakdown in talks earlier this week between the administration and the Hawaii State Teachers Association on the teacher furlough issue:

“The House Majority Caucus reiterates its support for a special session to consider the teachers' furlough issue only after the negotiating parties reach a tentative agreement.

The House Majority Caucus emphasizes that it does not support the passage of any bill that, absent an agreement, legislatively limits the number of non-instructional days in exchange for increased teachers' pay. Passing such a bill before a tentative agreement is reached would constitute an inappropriate interference into the collective bargaining process. The Caucus would consider such a bill after a tentative agreement is reached.

The House Majority’s position remains that public education is a priority, and urges the parties to continue negotiations to restore the number of student instructional days during 2010 and 2011.

I would like to make a personal point. Although by law the Legislature is not involved in the negotiations, I would look unfavorably on any tentative agreement that requires the layoff of any personnel of the Department of Education."

My child left behind

Hundreds of demonstrators rallied at the State Capitol today to protest the closing of Hawaii public schools due to the State's implementation of "furlough Fridays."

As part of the Hawaii State Teacher's Association (HSTA) recently ratified two-year contract with the State, teachers will be furloughed 17 days of each school year, leaving more than 170,000 school children with two three-day weekends a month -- and over three weeks out of the classroom.

Parents, teachers and students displayed signs saying "I need 180 days" and "My child left behind." The general message from protesters was for lawmakers and the governor to find another way to balance the state budget without cutting student educational days. (Speaker Calvin Say's public statement on the anti-furlough Fridays rally)



Members of the event's organizing group, Hawaii Education Matters, hand delivered a petition to Governor Linda Lingle. It is reported that more than 4,000 signature are on the petition.

Jack Johnson, North Shore resident and famous music artist, sang "Better Together" and other songs for parents, teachers and students who attended the rally.

Speaker Calvin Say's Statement on Parent's Rally

"I recognize that parents are concerned about the furloughs for public school teachers on instructional days.

By law, wages and hours of employment of state employees are subject to collective bargaining agreement between the union and state employer (which, for public school teachers, are the Board of Education, Superintendent of Education, and Governor, not the Legislature). Since the Legislature was not involved in the negotiations, it is inappropriate to engage in after-the-fact criticism or blame of either party for the final agreement. Both the state employer and union had an extremely difficult time. I respect their efforts and the process.

Going forward, the House will consider solutions to the school furlough issue during the upcoming regular session.

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.

Much has been made for using the hurricane fund to reduce the number of furlough days for public school teachers. That, however, would be shortsighted. The hurricane fund acts as a reserve which, in essence, allows the State to issue construction bonds at good interest rates. 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. What will we do in the future after the hurricane fund is depleted?

Solutions to the budget crisis will require a better, more thoughtful and balanced approach combining revenue enhancements and expenditure reductions. The general fund shortfall is over $1 billion, and the savings from furloughs are not enough to close the deficit. To resolve the problem, the Legislature will have to be innovative and courageous enough to make difficult decisions that will inevitably create hardship, but will serve the good of the general public."

Capitol open on Furlough Fridays

Click here to see the memorandum from DAGS on the implementation of two-day Furlough Fridays and how it will affect State buildings. Twenty one state buildings will be affected. The State Capitol is not on this list and will remain open on furlough days.

Joint Committees on Labor get update from DLIR

Rep. Karl Rhoads, Chair of the House Committee on Labor and Public Employment, questions Linda Smith, Governor's Policy Advisor and Darwin Ching, Director of Labor and Industrial Relations.

The Department of Labor and Industrial Relations (DLIR) provided an update this morning on the status of the Department's budget and how it will be affected by budget cuts and restrictions. Here are some main points:

*The Department is funded by general funds, but many employees are funded through federal program funds.The department's general fund portion of the budget in $15.8 million. Of that, they expect about $1.7 million to be restricted in the first year of the biennium.

*Chair Rhoads and Chair Dwight Takamine, Senate Labor Committee, were primarily interested in how these restrictions might impact services to the public, particularly services related to unemployment.

*The department could not immediately share that information with the joint committees, however, it will be provided as soon as possible.

*Director Ching clarified that the Unemployment Trust Fund, which currently has a balance of $280 million, will not be impacted by any proposed furlough plan. It is unknown at this time how the state layoff proposal would impact the fund. The department is contemplating reducing the number of weeks of unemployment benefits.

* Linda Smith said that employees with seniority would be able to bump other state employees so they are not sure how much would actually be saved at the end of the process. As such, they reserve the right to issue another round of layoffs if the savings are not sufficient.

*Chair Rhoads requested that the Governor not furlough employees within the department who are funded with federal funds. He indicated that it doesn't make sense, especially with our budget shortfall, to lose federal funds due to unnecessary furloughs. The Governor indicated in the past that if state workers are furloughed, their federally funded colleagues should be as well, even though there is no savings for the state budget.

*Senator Slom asked how the layoff list that was presented to the unions today was developed. Linda Smith replied that the potential layoff list was developed according to each department director's priorities, with the goal of minimizing impact of services to the public.

*Asked if the Governor is planning to appeal Judge Sakamoto's ruling on the Governor's authority to furlough, Linda Smith replied that they had not seen the Judge's written order yet and could not comment on an appeal until then.

*Chairs Rhoads and Takamine emphasized the need to keep the public informed on what services will be impacted by budget cuts, layoffs and/or furloughs. If programs that the public relies upon are terminated without much advance notice, such as Healthy Start, it creates an even greater hardship for families.

Info Briefing on Labor Issues

The House Committee on Labor & Public Employment and the Senate Committee on Labor will hold a joint informational briefing on Monday. Hearing notice here.

Date: Monday, July 20, 2009
Time: 10:00 a.m.
Place: State Capitol, Room 325

Agenda:

*Department of Labor will provide information on how the funding restrictions will impact the department.

*Department of Labor will also provide update on American Recovery and Reinvestment Act (ARRA) funds and on the condition of the state's unemployment trust fund.

*US Department of Labor is anticipated to make a presentation and provide comments on the Governor's proposed furlough plan.

Executive Order on Furloughs

The Governor's Executive Order on state furloughs, issued today, is here.

Furlough complaints

Public worker unions filed complaints on Tuesday, June 16, 2009 against the state on the furlough issue. Links can be found here: UPW complaint. HSTA complaint. HGEA complaint.

Tale of Two Letters

The Attorney General's office provided the House Speaker with an opinion on the Governor's authority to implement furloughs for state workers. Here is the letter from February 17, 2009. In summary, while the law is silent on the term furlough, it was the AG's opinion that the Governor would be unable to furlough without negotiating the terms of the furlough with the union.

The Attorney General's office revised their response on Friday. In summary, upon further review, the AG's opinion is that because furlough is a temporary reduction of hours, in this case due to economic reasons, the Governor is able to furlough without mandatory negotiation. Here is the letter from May 29, 2009.

Yesterday, Governor Lingle announced a plan to furlough certain state workers 3 days per month from July 1, 2009 for two years. The savings of $688 million will help to close the budget shortfall over the next biennium.