Civil Beat called for the Department of Education to make its general ledger to the Education Institute of Hawaii in the June 12 editorial, “Where’s The Money, DOE? Time to Turn Over Public Financial Records.”NOTE: pick the correct link

However, the DOE’s “financial records” will not answer the questions of how much is spent on public education or how much is spent at each school.


With respect to “how much is spent on public education”:

1) On the one hand, the commonly cited figure of $1.9 billion of general funds that are appropriated to the DOE omits some state general fund expenditures that, if properly allocated to the DOE, would bring the general fund expenditures on public education closer to $3 billion. Just two examples are:

a) Fringe benefits allocable to the DOE that are budgeted in the Department of Budget and Finance. The fringe cost (employer’s share of Social Security taxes, medical insurance, future pension payments, etc.) for regular full-time employees is approximately 60% of salaries.

b) Debt service on general obligation bonds, the proceeds of which were spent of DOE facilities. Debt service on G.O. bonds is budgeted in B&F. It is appropriately a cost of public education.

2) On the other hand, if the entire 60% of salary fringe costs were allocated to the DOE, it would overstate the current cost of public education. A portion of the 60% is the current cost of catch-up on past underfunding of post-retirement public worker costs. This cost is not a current fringe benefit cost of current employees. It is a cost that should have been incurred in prior years.

This cost in the aggregate does not increase if more employees are added to the public payroll, nor does it decrease if the public payroll shrinks. It should be a separate line item in the state budget and should not be attributed to individual employees or to individual state departments.

The Hawaii Department of Education building. The author says that there are a lot of variables in the DOE’s budget. Civil Beat/2010

With respect to “how much is spent at each school”:

3) The DOE allocates dollars to schools using a weighted student formula that is based on the number and characteristics of their students (English language learners, low income, transient, etc.). Principals decide how many teachers, librarians, counselors, office staff, vice principals, etc. to “buy” with their weighted student formula allocation. The “cost” of each teacher to a school is the average for all teachers.

If the average teacher salary is $59,000, then each teacher “bought” by the principal costs $59,000, irrespective of whether the teacher is a 30-year veteran with a salary of $75,000 or a fresh-out-of-college new hire who has not competed a teacher training program with a salary of $36,000. Should the actual cost of an individual school be the actual salaries of its teachers, or the average salary of all teachers?

4) Utility costs are budgeted and paid centrally by the DOE. These expenses are for the benefit of the students, so shouldn’t they be allocated to the schools? Should schools on Molokai or Lanai or Kauai be charged for electricity at a uniform average statewide kilowatt rate, or for the higher actual rate of electricity on those islands? Some underutilized schools are partially occupied by state and/or district-level staff. Should some of the electricity at such schools be allocated back to the state or district office? On what basis should such an allocation be made?

5) The following costs are budgeted and paid centrally, and the per-student costs of each category of costs vary widely by school. How should they be allocated to individual schools?

  • Student transportation costs.
  • The cost of meals served to students.
  • The cost of services to students with special needs. These costs include classroom teachers, special school bus services, an array of special services such as speech therapy, and tuition at private schools for certain students. The percentage of special needs students at individual schools ranges from fewer than 5% to more than 20%.
  • The cost of repairing and maintaining school facilities.

This is not a complete list of centrally budgeted and paid educational expenses that should appropriately be allocated to schools.

Concerns About Financial Requests

Two aspects of the Education Institute of Hawaii’s request for the DOE’s ledgers are concerning.

First, it is important to come to a common understanding of what costs are appropriate school-level costs, because almost by definition, costs that are not school-level are “overhead,” a generally pejorative term. If the costs described in No. 3-5 above (an incomplete list of such costs) are viewed as “overhead,” the general public (and possibly DOE school-level personnel, board of education members, and legislators) will think that too much is spent on overhead and not enough on students.

Diving into the DOE general ledger without an understanding of how the numbers in them should be viewed is a recipe for misunderstanding and disagreement rather the transparency the EIH and others appropriately seek.

Second, the DOE asserts it is developing the kind of detailed per-school cost data that the EIH wants to develop. If the EIH develops its own figures, it is unlikely that they will look the same as those the DOE will develop, because the DOE and the EIH are unlikely to use the same allocation criteria.

The result will be two different sets of data, with consequent disagreement between the DOE and the EIH and confusion on the part of the general public that will not be helpful in getting to commonly-accepted school-level data the EIH seeks.

Wouldn’t it be better if the DOE and the EIH could first come to a common understanding of how costs should be determined, and then how the costs should be allocated, before EIH tries to develop these data on its own off a general ledger?

Community Voices aims to encourage broad discussion on many topics of community interest. It’s kind of a cross between Letters to the Editor and op-eds. This is your space to talk about important issues or interesting people who are making a difference in our world. Column lengths should be no more than 800 words and we need a current photo of the author and a bio. We welcome video commentary and other multimedia formats. Send to The opinions and information expressed in Community Voices are solely those of the authors and not Civil Beat.

About the Author