Gov. Linda Lingle's plan to close a $90 million deficit by restricting public school funds in anticipation that federal stimulus money for education is on the way drew a warning from Superintendent Pat Hamamoto yesterday:

If the stimulus money is not received by May 6, public schools may be forced to shut down 24 days early this year.

The likelihood of that is real, Hamamoto told state Board of Education members yesterday, saying the federal government hasn't even released applications for the funds to the states. The U.S. Department of Education is not expected to do that until at least March 31, leaving only 36 days for the state to apply for and receive the funds.

The governor announced yesterday that she intends to restrict the state Department of Education's budget for the current school year by some $90 million in anticipation of federal funds.

"We do not agree with the governor's plans," Hamamoto told board members. "It would be impossible for us to make our payroll before school ends. If the replacement federal funds do not reach us on time ... one consequence is to close schools and DOE offices by May 6."

BOARD OBJECTIONS

The state is expected to receive $192 million in federal stabilization funds, with about $157 million of it to be split between the public school system and the University of Hawai'i. The money is part of the economic stimulus package approved by Congress and President Obama and was meant mostly to assist the public education system.

While Lingle's plan would allow those dollars to go to education, she announced yesterday she plans to restrict state dollars that go to education by the same amount for the current fiscal year.

Lingle said her administration has the discretion to use the federal education money for the deficit. The governor challenged Hamamoto and some lawmakers who believe she is taking the federal money away from public education.

"It certainly may affect some plans that she had, but my responsibility is the state of Hawai'i and our overall budget," Lingle said. "She is very narrowly focused, and she wants more money, and they want more money every year."

Board of Education members yesterday cried foul, passing a resolution to appeal to the state's U.S. congressional delegation for help.

"Either I'm missing something or the governor thinks the public is extremely stupid," said board member Breene Harimoto.

"The intent was very clear on what this money was for. This plan certainly circumvents that intent."

Hamamoto agreed. "Primarily, we're the gate by which a huge amount of federal dollars would come into the state," she said.

Board member Kim Coco Iwamoto said the governor is attempting to abuse the DOE's access to federal funds to balance the state's current budget shortfall.

She said the funds are specifically being made available to states to restore cuts to the public education systems, not to fill state budget gaps.

"Do you think ... it was the intent of the president and Congress that schools should be used as a Ponzi scheme? That's what it comes down to, a Ponzi scheme," Iwamoto said.

Board member Donna Ikeda had similar objections.

"I can't help but wonder if this is legal. And not just legal, but is it morally right to take money from the federal government intended for the specific purpose of restoring education," Ikeda said.

RESTORING CUTS

Board members also approved a request to the governor that she use stabilization funds to restore some $86.6 million in budget cuts planned each year over the next two years rather than use the funds now.

Included in the $86.6 million in cuts is about $40 million that the BOE recommended to the governor in October. The cuts would eliminate about 240 positions from the public school system, including resource teachers, speech pathologists, occupational therapists and other support staff on the state level.

Last week, the House further reduced the DOE's budget by $30.7 million.

Hamamoto said if the state accepts the stabilization funds, it would be required to show that specific improvements to the education system are being made. Under the governor's plan, that wouldn't be possible, she said.

"We know from reading the law that the federal government will be asking for reports on how many jobs were saved, how many jobs were created, where the money was spent," she said.

The feds will also be asking for the DOE to show how much academic progress is being made with the money.