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.