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Act 51: Can It Save The Public Schools?

The legislature passed a bill “reinventing” the public schools. Now some of the town’s most powerful business executives are trying to make it work.


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What is Act 51?

In 2004, after a much-publicized debate, the Legislature passed Act 51, somewhat grandly called the Reinventing Education Act, over the governor’s veto.

The law contains a mixed plate of provisions. Some are small-scale items that really belong to a school board rather than a legislature: for instance, ordering math textbooks, hiring high-school student-activity coordinators and prohibiting individual schools from having their own academic calendars.

The Legislature did not, as the Lingle administration wanted, break up the Department of Education and reduce it to simply a statewide monitoring agency. The governor called Act 51 “fake reform.” It does, however, contain some provisions that hold at least the promise of system-wide change.

  1. Act 51 calls for a new, more accurate system for allocating funds to schools, based on the number of students at a school. A weighted student formula allocates more money for students who fall into certain “more expensive” categories—special education, low income, English as a second language.
  2. The law gives principals more control of their schools’ budget. Principals will also be held more accountable, with a performance-based system of rewards and sanctions. In order to prepare them for their expanded duties, Act 51 provides funding for training and assistance.
  3. Currently, many of the DOE’s functions are spread throughout numerous state agencies, such as the Department of Human Services, the Department of Health and the Department of Accounting and General Services. Act 51 moves these functions back to the DOE. The process, called delinking, gives the DOE more autonomy, but also risks creating a larger, more centralized bureaucracy.


“The danger here, particularly for business people,
is to spot the problems and expect immediate and
rapid change. That would be great if it happens, and
we’ll get it in a few places, but there’s going to be
some places where we’re going to have to roll up
our sleeves and grind.”
David Carey:
President and CEO, Outrigger Enterprises;
co-chair, DOE Interagency Working Group

HONOLULU: Act 51 calls for moving money and people from other government agencies to the DOE—which is already the largest and most centralized school district in the nation. Don and David, you’re heading up this effort. Are we just going to end up with an even bigger bureaucracy?

Carey: I assumed that the schools were responsible for making sure that their buildings were maintained. The reality is that they’re responsible for running the schools, but the Department of Accounting and General Services provides repair, maintenance and building services. It’s another department, under another budget, under another director, with another set of personnel processes. In between DAGS and the DOE are the governor and the Legislature and the budget process.

There are a lot of good people in the middle there, but they have this enormous beast to try to move through. On top of that, they are critically short on resources. There are roughly 260-something schools, with a total of 4,000 buildings. They have between $12 million and $16 million per year in operating and maintenance budget funds. For any business I’ve ever been in, that’s absolutely nuts. They have a state procurement process, a legislative approval process and a project management process that was not designed to manage that many schools. The people who are living with these problems—the principals and the teachers—are miles from the people at DAGS.

I’m in the service business, and we’ve found that you’re much more effective when you put the action closer to the customer. Here, the customers are the students, the teachers and the principals, and the action is somewhere else in state government. So I’m happy to take that responsibility and put it in one place, so we’ll have the ability to streamline it and make it better.

Coppa: There’s a fundamental concept in business: If you give someone accountability, it’s only fair to give them the tools to achieve it. If the superintendent is responsible for achievement in education, we need to give her the ability to budget and do facilities and personnel management. I would argue that we’ve not made the DOE larger; we’ve given her the leverage to be successful. Frankly, the whole organizational structure still needs a whole lot of work.

Carey: In one of the meetings with DAGS and the DOE, we had them explain, soup-to-nuts, the actual process to get a project done. If a project went really, really well, it took three years. We saw what all the steps were, where all the paperwork went and the business guys in the room, their eyes went like this [opens eyes wide]: Oh my god, I can’t believe that’s what we have allowed to evolve in our state systems.

There was a big argument a couple years ago about how much we were spending per student. Why? Because no one entity had the numbers. Pat Hamamoto had some of the numbers, DAGS had some of the numbers, DOE had some of the numbers, DHRD had some of the numbers. We went through this massive process. Probably the unions were the only ones who knew exactly how many employees they had. That’s no way to run a business.

Carey: At the end of the day, the macro-budget of the schools doesn’t change. What’s being talked about is relocation of personnel and resources from one place to another, not adding on to the system. There are efficiencies inherent in doing this, but it’s not going to happen next week, next year, even as of July 1.

D’Olier : There were a lot of things about what the superintendent did not control that I didn’t understand when I started this journey. I didn’t realize that the budget got created on a line-by-line basis by the Legislature. If I was the superintendent, I couldn’t just pick my team and hire who I wanted without going back and getting the right lines fixed in the legislative budget.

A task this large is going to get accomplished by a group of people and, in my view, that’s the superintendent; her cabinet, which is evolving; a chief financial officer, who doesn’t reside in the system right now; and complex area superintendents who understand the mission and are out there going for it every day. We don’t have the budget flexibility for the superintendent to build that team yet.

Moore: From an educational standpoint, the premise is that the state should set the standards, and the schools should decide how to meet them. It’s pushing down to the schools a lot of the authority that heretofore has been at the state level. The transfer from DAGS and the transfer from Department of Human Resources Development (DHRD) bring control closer to the schools.

“The people around this table are business people
who work every day and have things to do. We’re not
in this because we feel it’s a fake reform. This is real!”
Bruce Coppa: Vice President, Hawai‘i 5-O Group;
chairperson, DOE Committee on Weights

Carey: The role the business community must play is to hold the schools accountable from a public pressure standpoint. I’m vitally interested in seeing the education improve. If someone isn’t encouraging both the administrators on the school side and the legislators on the policy side, it might not happen. This is hard stuff. This is not easy.

HONOLULU: One of the biggest shifts is the changing role of Hawaii’s school principals. Principals are going to have more resources, but they are also going to be under pressure to perform, like business CEOs.

D’Olier : A while ago, a group of entities, including the Hawaii Business Roundtable, created a Principals Leadership Academy. Randy should be talking about that. He taught me that where there is a high-performing public school (and make no mistake about it, we have high-performing public schools in the state of Hawaii), there’s always a great principal, or a great principal just left. The Roundtable has provided volunteers for a process that’s trained 60 principals to date, and has another 24 waiting to train over the next year. Business-related practices, strategic planning, communications—things that business leaders have to know more than principals traditionally have had to know.

Horner: I agree 100 percent that the principals are key. But the Roundtable’s position paper also makes clear the importance of complex area supervisors. Those are the field generals who can really control kindergarten through high school. On the Neighbor Islands, the complex area supervisor should be the last line of authority. That’s where the decentralization should begin and end. We agree with Gov. Lingle that we need decentralization, but it should be with those 15 complex area supervisors. If you just look at the principal of a high school or middle school, it’s hard to hold them accountable if you don’t hold accountable the elementary schools that feed the middle school.

Coppa: With the student-weighted formula, we are moving discretionary monies to the principals. Currently, when a teacher is sent to a school, funding is by position. If the principal decides the school doesn’t need that teacher, the dollars stay with the principal. The principal now has the authority to do something with that money. She does have help in that regard, because you have the School Community Council seeing what it can do with that money.

Horner: The School Community Councils were created by the Legislature to replace the SCBM. The base of their charter is to approve the academic plan and the financial plan for the school. That’s a work in progress: There are 22 pilot schools. Why don’t you speak to it, Randy?

Moore: The preparation of the academic and financial plan starts with a review of student data. The school, led by the principal, says, what do we know about our students? How do they do in reading? How do they do in math? Do they come to school? Do they come to school on time? What are their income demographics, their foreign language demographics?

Then comes the question, what do we need to do differently, so that we will get better results from our students? The process entails research as to what schools in other parts of the country do to get better results. The academic plan is research-based, and then the financial plan is the budget that goes along with that. The school doesn’t get any more money, but it does get to decide how to spend that money. Twenty-two schools have prepared those plans, to be implemented this coming fall. The other 235 will do it for the following fall.


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