Proposed budget cuts of up to $94 million to the state's public school system have renewed a long-standing debate over the efficiency and size of the Department of Education.

Critics of Hawai'i's public school system say the DOE is wasteful and inefficient, with too much money at the top and not enough money down at the school level.

Defenders of the system say there's little wiggle room for cuts with most of DOE's funds going to the school level and just $119 million — or 5 percent of DOE's budget — devoted to administration.

Lawmakers have yet to settle on an exact amount to be cut from the public school system's $2.4 billion budget. So far, Gov. Linda Lingle has proposed some $40 million in cuts that would affect several hundred positions and dozens of programs. The state House and Senate have proposed even more, making potential cuts to the DOE anywhere from $86 million to $94 million.

Managers "are scrubbing their budgets again but we just don't have that kind of money at the administration level. At some point you have to look at cuts to the schools. We're very near to that point," said James Brese, the DOE's chief financial officer .

Sen. Fred Hemmings, a longtime critic of Hawai'i's public education system, says impending cuts will be an opportunity to trim what he calls its bloated bureaucracy.

"I think you could cut hundreds of millions of dollars," Hemmings said.

He pointed to $40 million in cuts to DOE proposed by Lingle that education officials have said would not affect school-level programs or staff as one example of wasteful education spending.

"There's a lot of fat. The fat is often in positions that just aren't needed," he said.

Education officials reject claims of a massive DOE bureaucracy that needs to be cut back.

"The problem is, there's not that much left in the state office" after the governor's $40 million in cuts are accounted for, said DOE Budget Director Adele Chong.

"While we need people in the classroom, we also need people at the complex and state level to coordinate services and school-based programs across the state," Chong said.

"It's not as if we have people sitting around twiddling their thumbs," she said.

5% FOR ADMINISTRATION

The DOE's own budget allots about $119 million to administration with about 2,400 employees after the governor's cuts are accounted for. That makes up 5 percent of the DOE's budget.

Brese said DOE's administration budget has always been on par with or less than the national average of about 6 percent.

Most DOE employees — about 19,000 — are on the school level. And so is the bulk of DOE's money, education officials say.

About $1 billion is allocated directly to schools under the Weighted Student Formula, the public school system's method of sending money down to the school level. That's about 42 percent of DOE's total budget.

Principals, with the support of their school community councils, then decide how that money is spent.

But that only makes up a portion of DOE's budget that is considered school level. Another $539 million is spent on special education, an area of spending that has grown dramatically over the past 15 years.

FELIX CONSENT DECREE

Under the Felix Consent Decree, spending on special education and other special needs programs has increased by more than $400 million since 1994, when the state settled a lawsuit by agreeing to the decree.

Today, special education spending makes up 22 percent of DOE's budget.

Tack on an additional $397 million for school programs, food service, facilities, utilities and student transportation and that brings the total cost of positions, services and programs that directly affect public schools to about $1.8 billion.

Despite those numbers, many have the perception that DOE's administration is too large, sucking up an exorbitant amount of money.

"The DOE has sorely resisted a comprehensive audit since 1973. So they and we don't know how to account for their positions and all of their money," Hemmings said.

He said recent audits prove there's "an incredible amount of malfeasance" within the DOE system.

For instance, an audit by State Auditor Marion Higa released in February of the department's construction procurement practices uncovered widespread circumventing of procurement laws and rules.

Higa found that the DOE was regularly spending large amounts to outsource work that could be handled within the department. For instance, the department spent some $21 million on management contracts to oversee $160 million in construction work during the fiscal year from July 1, 2006, to June 30, 2007.

"If Pat Hamamoto wants to save a lot of money, she should lay herself off along with the bureaucracy for a period until we get over this," Hemmings said. "Let the principals run the schools, as they should. ... The Catholic Church has a number of schools and the schools run themselves."

Rep. Roy Takumi, chairman of the House Committee on Education, said there are instances when the DOE bureaucracy helps the statewide school system to run more efficiently.

It wouldn't be efficient, Takumi said, for principals to have to deal with construction projects, school bus contracts, food service management and managing special education services.

Takumi said Hemmings' argument fails to recognize that many functions of the "bloated bureaucracy" are direct services to schools.

"Food service is a great example. ... Food service is a central expense paid for, monitored and overseen by the central office. But go down to the Queen Lili'uokalani Building (the DOE administrative offices) and there's not one cafeteria worker there preparing lunches. They are at the school. For all intents and purposes, those are school-based dollars," Takumi said.

DEBATING WHAT TO CUT

Education officials make similar arguments about the hundreds of millions of dollars spent each year on special-education services. While the money is spent by the administrative office, the services are direct to students with special needs.

"Again, the special-education kids are not at the Queen Lili- 'uokalani building; they're at the schools," Takumi said.

Takumi said while $90 million in cuts to a $2.4 billion budget may not seem like a lot, there's really "very little wiggle room" for cuts.

Within DOE's budget is some $700 million in "pass through" money, which is made up of healthcare benefits, retirement benefits and debt service.

Takumi said those dollars, along with salaries, utilities and other fixed costs, are nearly impossible to cut.

"You're not going to take it off of food and you're not going to take it off of electricity. So you look at the amount of money that is left and the most likely place at that point is to take it out of the classroom," he said.

One major area of potential cuts is the $136.5 million spent on "categorical programs," which include athletics, after-school tutoring programs, programs for at-risk students, Junior ROTC and other school-level services.

In October, when the Board of Education began planning for potential budget cuts, many state residents made impassioned pleas to spare junior varsity athletics.

Similar pleas came from those involved in programs for at-risk students, services for pregnant teens and peer-education programs.

"Are they core to the mission of the school and No Child Left Behind? Probably the answer to that is no. It's those types of programs that are at risk," Takumi said.

DOE officials readily admit that budget cuts will be a way for them to change the way in which the system does business.

"This is not to say that we can't improve," Brese said. "It has forced us to look at the way we deliver services and try to see can we do things differently," he said.

Takumi agreed, saying recent audits have shown the DOE has room for improvement.

"Clearly the money can be spent more efficiently, more effectively. But you can make that assertion with every state department," he said.