Audit: DOE misses millions in revenue

State auditors found that the Hawaii Department of Education has failed to collect millions of dollars in fees over the past decade and has no written policies or procedures in place to implement the process necessary to do so in the future.

The Hawaii State Auditor’s office issued a report Tuesday on the DOE’s administration of school impact fees, concluding that only $5.3 million in school impact fees have been collected since 2007 — a fraction of the $80-$100 million needed to build a single school.

In fact, the revenue generated by school impact fees is less than half the amount DOE administrators missed out on in one school district alone. In the past 12 years, state auditors estimated the DOE failed to collect nearly $11 million in potential fee revenue in Honolulu’s Kalihi-Ala Moana district.

“The DOE’s inconsistent and problematic implementation of the school impact fee law calls into question the relevance and appropriateness of the fees that have been collected to date,” a summary of the audit said. “The department has no written policies and procedures for the selection of potential school impact districts, the factors that should be considered in determining the size of potential districts, or oversight and review of this process.”

In 2007, the Hawaii Legislature passed a school impact fee law meant to give the DOE a new method of financing the construction of schools and classrooms in areas anticipating high residential growth, but state auditors found that education department administrators have hampered the new legislation’s effectiveness.

“We found the path to implementation has not been easy,” auditors wrote in their conclusion of the 45-page report. “As well-intentioned as it may have been, we question whether the school impact fee law can be effective enough to make the ‘impact’ we believe lawmakers were hoping to make.”

According to the audit, the DOE has not made implementation and administration of the school impact fee law a priority, instead delegating responsibility for establishing district boundaries and fees to a single employee, “a Land Use Planner, who has not been provided administrative rules, written policies, or formal procedures for guidance.”

The land use planner, whose name was not included in the auditor’s report, is responsible for deciding when and where to set up impact fee districts and controlling the order and size of the school districts but was unable to exactly how he went about making those determinations.

The State Auditor’s office included a list of recommendations in Tuesday’s report, including suggestions that the DOE undertake a comprehensive evaluation of its implementation of the school impact fee law and create written policies to guide staff.

Auditors also recommended the Board of Education require the department to submit a written report of its progress and “direct the DOE to implement the recommendations necessary to address and correct the audit findings.”

The findings of the audit were submitted to the DOE in late August, according to the report, which said that although the department “did not materially disagree with or dispute any of the audit findings,” DOE officials took issue with the auditors’ overall assessment that the school impact fee law has had a questionable impact.

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