[Senate Hearing 111-168]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-168
 
   STIMULATING HAWAII'S ECONOMY: IMPACT OF THE AMERICAN RECOVERY AND 
                        REINVESTMENT ACT OF 2009

=======================================================================

                                HEARING

                               before the

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            SPECIAL HEARING

                     AUGUST 24, 2009--HONOLULU, HI

                               __________

         Printed for the use of the Committee on Appropriations




  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html

                               __________


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                      COMMITTEE ON APPROPRIATIONS

                   DANIEL K. INOUYE, Hawaii, Chairman
ROBERT C. BYRD, West Virginia        THAD COCHRAN, Mississippi
PATRICK J. LEAHY, Vermont            CHRISTOPHER S. BOND, Missouri
TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
BARBARA A. MIKULSKI, Maryland        RICHARD C. SHELBY, Alabama
HERB KOHL, Wisconsin                 JUDD GREGG, New Hampshire
PATTY MURRAY, Washington             ROBERT F. BENNETT, Utah
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
DIANNE FEINSTEIN, California         SAM BROWNBACK, Kansas
RICHARD J. DURBIN, Illinois          LAMAR ALEXANDER, Tennessee
TIM JOHNSON, South Dakota            SUSAN COLLINS, Maine
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
FRANK R. LAUTENBERG, New Jersey
BEN NELSON, Nebraska
MARK PRYOR, Arkansas
JON TESTER, Montana
ARLEN SPECTER, Pennsylvania

                    Charles J. Houy, Staff Director
                  Bruce Evans, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page

Opening Statement of Chairman Daniel K. Inouye...................     1
Statement of Senator Daniel K. Akaka.............................     3
    Prepared Statement of........................................     3
Statement of the Honorable Linda Lingle, Governor, State of 
  Hawaii.........................................................     4
Linda Smith, Senior Policy Advisor, State of Hawaii..............     4
Prepared Statement of Linda Lingle...............................     7
Economic Indicators..............................................     7
Five-Point Proactive State Recovery Plan.........................     8
Closing the State Spending Gap...................................     9
American Recovery and Reinvestment Act Overview..................     9
ARRA Funding.....................................................    10
ARRA Competitive Grants..........................................    10
Challenges and Opportunities.....................................    11
Statement of the Honorable Colleen Hanabusa, President, Hawaii 
  State Senate...................................................    15
    Prepared Statement of........................................    17
Human Services...................................................    18
Health...........................................................    19
Public Education.................................................    19
Statement of Rear Admiral Michael A. Giorgione, CEC, United 
  States Navy, Commander, Naval Facilities Engineering Command 
  Pacific Fleet Engineer, U.S. Pacific Fleet.....................    24
    Prepared Statement of........................................    25
Department of the Navy...........................................    25
Department of the Army...........................................    25
ARRA Civil Works Projects in Hawaii..............................    26
Department of the Air Force......................................    26
Statement of Brennon Morioka, Director, Hawaii Department of 
  Transportation.................................................    27
    Prepared Statement of........................................    30
Selection of Highway Projects....................................    30
Status of Highway Projects.......................................    31
Status of Airports Projects......................................    31
Expediting Work..................................................    31
Statement of Abraham Y. Wong, Division Administrator, Federal 
  Highway Administration, U.S. Department of Transportation......    34
    Prepared Statement of........................................    35
Overview.........................................................    36
Economically Distressed Areas....................................    37
Transparency, Accountability, and Risk Management................    37
Certifications and Reporting Requirements........................    38
Statement of Dr. David Lassner, Vice President for Information 
  Technology and Chief Information Officer, University of Hawaii.    41
    Prepared Statement of........................................    44
Hawaii Broadband Task Force......................................    44
American Recovery and Reinvestment Act of 2009 and Broadband.....    45
The Importance of Anchor Institutions............................    45
Some Broadband-Related Hawaii Proposals..........................    46
Suggestions for Improvement in the BTOP Program..................    46
Prepared Statement of the Schools, Health and Libraries Broadband 
  Coalition......................................................    53
Statement of Mufi Hannemann, Mayor, City and County of Honolulu..    63
    Prepared Statement of........................................    66
Job Training.....................................................    66
CDBG.............................................................    66
Homelessness.....................................................    67
Public Safety....................................................    67
Broadband........................................................    67
Statement of Patricia Hamamoto, Superintendent, Hawaii Department 
  of Education...................................................    70
    Prepared Statement of........................................    72
ARRA and Hawaii's Economy........................................    73
State Fiscal Stabilization.......................................    73
Education Reform.................................................    74
Effective Educators and Academic Standards.......................    74
Improved Data Collection and Use.................................    74
Other Supports for Struggling Schools............................    75
Statement of Gordan Y. Furutani, Field Office Director, Honolulu 
  Office, U.S. Department of Housing and Urban Development.......    77
    Prepared Statement of........................................    79
Statement of Matthew A. Nagato, Communications Director, Hawaii 
  Primary Care Association.......................................    88
    Prepared Statement of........................................    89
Context for Recovery Act Funds for Community Health Centers in 
  Hawai`i........................................................    90
Funding Purposes and Amounts.....................................    90
Effects on Services and the Economy..............................    91
Comments on Process..............................................    92
Statement of William Parks, Special Assistant and State of Hawaii 
  Liaison, Office of Electricity Delivery and Energy Reliability, 
  U.S. Department of Energy......................................    95
ARRA Energy Awards for the State of Hawaii.......................    95
Hawai`i Clean Energy Initiative Summary--January 2008-August 2009    96
Prepared Statement of William Parks..............................    99
Smart Grid Performance Metrics and Trends........................    99
The Smart Grid Investment Grant Program..........................   100
The Smart Grid Demonstration Program.............................   101
Interoperability and Cyber Security..............................   101
Smart Grid Research and Development..............................   102
Other Recovery Act Initiatives...................................   103
Statement of Theodore E. Liu, Director, Hawaii Department of 
  Business, Economic Development and Tourism.....................   105
    Prepared Statement of........................................   109
Statement of Maurice H. Kaya, Technical Director, Pacific 
  International Center for High Technology Research..............   128
    Prepared Statement of........................................   130
Additional Submitted Statements..................................   132
Prepared Statement of Neil Abercrombie, U.S. Representative From 
  Hawaii.........................................................   132
Prepared Statement of the Hawai`i Charter Schools Network of the 
  Unified Voice of Hawai`i's 31 Public Charter Schools...........   134
Prepared Statement of Waldeen K. Palmeira, Hui Na Makaiwa o 
  Wailuanuiaho`ano...............................................   135
Prepared Statement of the Ironworkers Stabilization Fund, Local 
  625............................................................   137
Prepared Statement of Hughes Network Systems, LLC................   137
Prepared Statement of Anna Chavez................................   140
Prepared Statement of the Hawaii State Legislature...............   143
Prepared Statement of Maui Economic Opportunity, Inc.............   145
Prepared Statement of the West Hawai`i Explorations Academy......   146
Prepared Statement of the Hawaii State Teachers Association......   147
Letter From Senator Daniel K. Inouye.............................   148
Letter From Linda Lingle, Governor, State of Hawaii..............   149


   STIMULATING HAWAII'S ECONOMY: IMPACT OF THE AMERICAN RECOVERY AND 
                        REINVESTMENT ACT OF 2009

                              ----------                              


                        MONDAY, AUGUST 24, 2009

                                       U.S. Senate,
                               Committee on Appropriations,
                                                      Honolulu, HI.
    The committee met at 9:29 a.m., in room 325, Hawaii State 
Capitol Building, Hon. Daniel K. Inouye (chairman) presiding.
    Present: Senator Inouye.
    Also present: Senator Akaka.


             opening statement of chairman daniel k. inouye


    Chairman Inouye. I call this hearing to order.
    Before proceeding, I wish to advise all of the witnesses 
that your full statements have been received, and they will be 
made part of the official record.
    And with that, aloha, and welcome to this hearing; it's on 
the stimulus bill, the American Recovery and Reinvestment Act 
of 2009 (ARRA).
    The purpose of this hearing is rather simple. It's to get 
the status report from some of the agencies and organizations 
that have received the stimulus funds through this act.
    In particular, I'm interested in whether the funds have 
gotten out into the community to hire new workers or to provide 
additional support services. I'm interested to know how well 
the goals of this act have been met, to date.
    I'm here to learn about the successes, as well as the 
continuing challenges regarding this program, and to determine 
what other assistance we should be providing.
    Transparency and accountability are foremost in the use of 
economic stimulus funds, and so today I look forward to hearing 
about the plans and coordination between Federal, State and 
county governments and agencies, and the public and private 
sector to take advantage of the funds.
    And by way of background, I wish to share with you the 
history behind this act. At the end of 2008, our Nation--as all 
of you will agree--faced the greatest economic crisis in a 
generation. Our economy was on the brink of a second 
Depression, or great recession. And I'm certain all of us will 
agree that fear was rampant, and widespread, and confidence in 
the business community, and the consumer community, was very 
scarce.
    By the first quarter of 2009, our economy had lost on an 
average of 700,000 jobs a month, the fastest rate of decline 
since 1958. Foreclosures were at a record level, banks were in 
a crisis, and nearly $1 trillion in wealth had been lost in the 
stock market in the steady downturn.
    The top priority of the new White House and the Congress 
was to stop this economic bleeding, create a measure of 
stability, and help those most harmed by this economic crisis. 
Only after our economy was stabilized could we begin to restore 
consumer and business confidence, and commerce with a long-term 
path to our sustained economic recovery.
    The first crucial step, we felt, was the passage of this 
act. It combined tax relief, Government spending for a total of 
$787 billion. And as chairman of the Senate Appropriations 
Committee, I felt it was imperative that we move quickly and 
cohesively to demonstrate to the American people our commitment 
to stabilize this economy.
    There are three major components in the economic stimulus 
package. First are the formula funds for highways, buses, 
education, social services, housing, and law enforcement that 
went to State and county governments, and that was 
approximately $690 million, as of this moment. In addition, 
funds went for a host of Federal agency projects for a total, 
to date, of $1.24 billion for Hawaii.
    The second is tax relief for individuals, businesses; 
approximately $300 million in tax reductions are going to about 
500,000 Hawaii workers, about $360 million in increased 
Medicaid payments have already gone to the State, and when we 
add that up with unemployment benefits, we come up to 
approximately $700 million. As a strong driver of job growth 
and innovation, small businesses are able to immediately deduct 
100 percent of any capital investment.
    Third are investments for a firmer foundation upon which to 
base our future prosperity. One is renewable energy, and in 
that area, approximately $47 million as of this moment, then 
establishment of a broadband infrastructure for the State of 
Hawaii, and now applications are being processed.
    And on health information technology, we're just setting up 
the rules of procedure on how to apply for these.
    But I think all of us can be proud that Hawaii has already 
made great strides in these three areas, and I'm confident that 
we can be competitive for these funds.
    It's been over 160 days since the package became law, and 
it continues to gain momentum, and we are expecting to see it 
peak in terms of release of funds and jobs created in about 
mid-2010, about a year from now.
    So, I look forward to hearing the testimony of our 
distinguished witnesses. For the record, I'd like to note that 
Mayor Hannemann, who will be testifying for all of the 
counties, and Representative Abercrombie will have submitted 
statements which will be made part of the record, and as I 
indicated, the full written testimony of all of the witnesses 
will be included in the published record, and this record will 
stay open for 2 weeks, for other members of the public, for 
those of you here who wish to submit your own testimony, you 
can do so, and I can assure you that they'll be made part of 
the record.
    Senator Akaka, would you like to make a statement?


                  STATEMENT OF SENATOR DANIEL K. AKAKA


    Senator Akaka. Thank you very much, Mr. Chairman.
    Aloha.
    Audience: Aloha.
    Senator Akaka. It is so good to be home in Hawaii, 
especially this morning, to join you in this cozy room at this 
hearing that has been set up by our chairman.
    Mr. Chairman, I appreciate your conducting this hearing 
today, and all of your extraordinary leadership and firm 
commitment to improving the lives of our constituents, as well 
as all Americans.
    The recession has caused too many families in Hawaii to 
suffer from job loss, reduction in working hours, home 
foreclosure and bankruptcy filing, and inability to obtain 
credit, or the elimination of State funding for an important 
social service program.
    However, the pain that working families in Hawaii have felt 
would have been much worse had the American Recovery and 
Reinvestment Act not been enacted.
    The American Recovery and Reinvestment Act has already 
protected and created jobs, strengthened infrastructure, helped 
to address the education, health, housing and social services 
needs of our communities and encouraged innovation for the 
development of alternative energy resources. However, much of 
the stimulus is still in the process of being implemented.
    This hearing is important so that we can better understand 
how the resources are being utilized, and what is being done to 
ensure timely and responsible implementation of the stimulus 
programs in Hawaii.
    I appreciate the witnesses appearing today, Governor 
Lingle, Senate President Hanabusa, the four mayors, and all of 
the other distinguished guests. I look forward to continuing to 
work closely with you, Mr. Chairman, and all of our witnesses 
to help promote economic recovery and assist working families.
    Thank you, again, Mr. Chairman, for your tremendous 
leadership and all of your efforts to improve the lives of our 
constituents.
    Mahalo.
    Chairman Inouye. I thank you very much, Senator Akaka.
    [The statement follows:]

             Prepared Statement of Senator Daniel K. Akaka

    Mr. Chairman, I appreciate your conducting this hearing 
today and all of your extraordinary leadership and firm 
commitment to improving the lives of our constituents and all 
Americans.
    The recession has caused too many families in Hawaii to 
suffer from a job loss, a reduction in hours, a home 
foreclosure, a bankruptcy filing, an inability to obtain 
credit, or the elimination of state funding for an important 
social service program. However, the pain that working families 
in Hawaii have felt would have been much worse had the American 
Recovery and Reinvestment Act not been enacted.
    The American Recovery and Reinvestment Act has already 
protected and created jobs, strengthened infrastructure, helped 
address the education, health, housing, and social service 
needs of our communities, and encouraged innovation for the 
development of alternative energy resources. However, much of 
the stimulus is still in the process of being implemented.
    This hearing is important so that we can better understand 
how the resources are being utilized, and what is being done to 
ensure timely and responsible implementation of the stimulus 
programs in Hawaii. I appreciate the witnesses appearing today, 
including Governor Lingle, Senate President Hanabusa, Mayor 
Hannemann, and all of our other distinguished guests.
    I look forward to continuing to work closely with you Mr. 
Chairman and all of our witnesses to help promote economic 
recovery and assist working families. Thank you again Mr. 
Chairman for your tremendous leadership and all of your efforts 
to improve the lives of our constituents.

    Chairman Inouye. We have five panels. Our first panel will 
be made up of the very distinguished Governor of the State of 
Hawaii, the Honorable Linda Lingle.
    Governor Lingle. Please. Governor, we have received your 
testimony, and proceed as you wish.
STATEMENT OF THE HONORABLE LINDA LINGLE, GOVERNOR, 
            STATE OF HAWAII
ACCOMPANIED BY LINDA SMITH, SENIOR POLICY ADVISOR, STATE OF HAWAII

    Governor Lingle. Thank you very much, Mr. Chairman.
    Chairman Inouye, Senator Akaka, it's always good to have 
you here at home, and to all of the people who come today to 
listen to this hearing, aloha to you, as well.
    As you mentioned, I have submitted written testimony, and I 
want to apologize in advance for having to leave after my 
testimony this morning, and get back to our negotiations, which 
I believe are making good progress. But my Senior Policy 
Advisor, Linda Smith, will remain to answer any specific 
questions once I leave. I mean, I'll answer questions now, but 
if there are other, she would be here in the room throughout 
this hearing.
    I appreciate, very much, this opportunity to discuss 
Hawaii's economy, and the role the American Recovery and 
Reinvestment Act is having. This comes at a time when Hawaii--
while still relatively healthy compared to other States--is 
facing its most severe and rapid economic downturn since 
statehood. We anticipated this downturn early last year, and 
launched a five-point economic recovery plan, and I want to 
touch on the elements, because they dovetail so well with the 
ARRA.
    First, we decided it was critically important that we 
refocus and increase Hawaii's tourism marketing and outreach 
efforts, and that meant rebranding Hawaii as a good value, 
because of the economy in the mainland. We're excited to 
announce that occupancy levels are finally stabilizing, 
although we know it's due to some deep discounting that has 
occurred.
    We also are excited about the scheduled air service--for 
the first time ever--direct from China, this would be on Hinon 
Airlines, and we look forward to that.
    The second part of our plan was to accelerate the State 
infrastructure projects. We identified--along with the counties 
and the private sector--$1.8 billion in roads, school repairs, 
airport projects and bridges, and like ARRA, we focused on 
those projects that could be started within 18 months. To date, 
we have started, awarded, or are in the process of bidding out 
nearly $1.2 billion of that $1.8 billion, and you can track the 
progress of our projects at hawaii.gov/cip.
    Third, we felt it was important to lower fees, and provide 
tax relief, and through our department of commerce and consumer 
affairs and department of labor, we have lowered business fees 
and taxes by $210 million, and we think it's important to keep 
those fees and taxes low, at a time when our small businesses 
are struggling to survive and to create more jobs.
    Fourth, we felt attracting and retaining private 
investment--particularly in the area of renewable energy--was 
critical to our long-term recovery. First Wind is doubling its 
wind farm on Maui, and Castle and Cook has constructed a 
photovoltaic farm on Lanai.
    In addition, the Walt Disney Corporation continues to move 
forward with its first-ever resort project outside of a theme 
park, the DeBartolo project moves forward for our cities, and 
the Kroc Center will be breaking ground very shortly out in 
Kapaau.
    And the fifth of our five-point plan was to maximize 
Federal dollars and partnerships, and ARRA dovetails with this 
five-point recovery plan.
    ARRA was passed in February, as you noted, and it will 
provide to us $1.4 billion through 2011. Our records show that 
State government has been officially awarded $666.5 million of 
the total, most of which was awarded in July and early August. 
We appreciate the help of the Senators' offices in alerting us 
to the awards, as well as to the competitive grant 
opportunities under ARRA.
    Congress recognized the importance of a Governor serving as 
a single point of accountability across the Nation, and in 
fact, I believe they concluded that was the only way to track 
this amount of money in this length of time.
    ARRA contains two competing objectives. On the one hand, 
ARRA is expecting a high standard of accountability, I believe, 
unprecedented in the Federal/State relationship, and at the 
same time, they have a desire for the quick disbursement of the 
money.
    I take this responsibility as the single point of contact 
very seriously, as does my chief of staff and our entire 
cabinet. We recognized, early on, the importance of removing 
some of the obstacles to the prompt expenditure of our funds, 
and we worked with the legislature to enact act 150, which 
became law on June 24. This allowed us certain exemptions from 
State procurement codes, such as the time-consuming rulemaking 
procedures, it allows us greater use of electronic procurement 
systems, and it sets up a process for each department, their 
procurement officer, to resolve disputes, rather than using the 
typical, lengthy administrative hearings process. We share the 
Senators' and the communities' desire to get these funds out, 
promptly, to start creating jobs, and to have a positive impact 
on the lives of the families here in Hawaii.
    Based on the State's accounting system, we have allotted 
and encumbered a total of $223.9 million of the total received 
so far, which is about 36 percent. I had an opportunity 
recently to be on a call with Vice President Biden, who has 
been made responsible by President Obama, to make certain that 
this act is carried out as it was intended by the Congress.
    There were about four Governors on the call that day, and 
we pointed out some of the challenges of getting these funds 
out quickly, as the Vice President had asked us to do. I want 
to list a few of the issues that we raised.
    Number one, not all of the awards being made to the States 
are channeled through the Governor's Office. Direct 
notification to Governors from Federal agencies making these 
awards, to both State and local entities would help save time 
and increase the chances for complete accountability. So, in 
other words, we're supposed to be accountable, but we don't 
even know sometimes that the awards have been made.
    Federal formats, guidelines, and reporting instructions 
were delayed in reaching the States. Guidelines have been 
changed, and in some cases, more than once. This requires the 
States to adjust their bid documents, procurement processes, 
and award contracts. An example is that the public housing 
agencies recently were alerted that they must amend their 
procurement rules before contracting for public housing 
repairs.
    Third, the State is being asked to track funds through both 
the initial receipt to all subrecipients and vendors. This can 
involved four to five layers before getting into the hands of 
the entity actually spending the money. All expenditures of 
$25,000 or more must be so tracked.
    Four, for some recipients, this is the fact that they have 
had to comply with strict Federal reporting regulations. Hawaii 
officials are taking the time to train them to ensure 
transparency and accountability requirements are met.
    Five, standard cash management requirements do not allow 
States to draw down funds unless they can be spent within a 
short window of time, usually 3 days. This provision is prudent 
for the Federal Government, but it means that the State expends 
its money first, and then invoices the Federal agencies for 
reimbursement, at which time the ARRA monies are shown as 
actually spent.
    Six, my final point to Vice President Biden, Hawaii has 
decided to pursue quality projects with long-lasting impacts, 
rather than short-term projects that may employ people for 3 to 
4 months only. An example is Hawaii's highway spending plan. 
It's about--11 percent of the funds were for short-term 
resurfacing projects, whereas other States--their percentage 
for short-term paving--was 50 percent.
    We also took the time to coordinate our projects with the 
county governments, and our transportation director personally 
making calls on our mayors to make certain that we were in sync 
with them, and Brennon Morioka will speak more about that 
during his testimony.
    We appreciate very much that the Federal Government 
recently recognized the need to help the States to oversee the 
award and tracking of ARRA stimulus funds by allowing us to 
spend a small portion of ARRA dollars on program management.
    In addition to spending ARRA funds in a thoughtful manner, 
Hawaii is well-poised for competitive grant opportunities in 
five key areas. Broadband communications deployment--we 
submitted our application to the Feds on August 14.
    Two, health information technology--Federal guidelines were 
issued last week, and we intend to meet the submission date of 
August 31.
    Three, the Race To the Top Educational Improvement Fund--
the Federal guidelines are in draft, and the funds are supposed 
to be--supposed to become available in October, and we look 
forward to competing there, as well.
    Harbor modernization--we are seeking grants to upgrade 
Honolulu, Kilo, and Kawaihae Harbors.
    The fifth area is in the area of renewable energy and the 
inter-island undersea cable. This would build upon the progress 
of a Hawaii clean energy initiative, and you will hear later, 
in detail, from Ted Liu, Bill Parks, and Maurice Kaya on this 
important subject.
    I want to thank Senator Inouye, you especially and your 
staff, for the support and the encouragement you have given to 
us in pursuing these competitive grants, for keeping us 
informed about ARRA as it moved through the Congress.
    In conclusion, ARRA's passage has been beneficial to the 
State of Hawaii, it is complimentary to our administration's 
five-point recovery plan, it helped to fill the funding gaps in 
the State budget, and it will allow Hawaii to continue to build 
a new economic base for the future.
    Mahalo.
    Chairman Inouye. Thank you very much, Governor Lingle.
    [The statement follows:]

                   Prepared Statement of Linda Lingle

    Chairman Inouye and Members of the Senate Appropriations Committee: 
Welcome to our State Capitol. I want to address a topic of utmost 
importance to the citizens of our State--our economic well-being and 
the role of the Federal Government in stimulating Hawaii's economy.
    Passage of the American Recovery and Reinvestment Act (ARRA) in 
February of this year occurred at a time of significant financial 
difficulties for our Nation as a whole, including the State of Hawaii. 
Hawaii is facing its worst economic recession since we became a State 
on August 21, 1959. Not only is the depth and breadth of this recession 
greater than we have experienced historically, it is anticipated that 
the recovery will not look like past recoveries. We may see prolonged 
periods of economic stagnation as our State, Nation, and world adjust 
to the dynamics of global economic uncertainty and its fiscal impact.
    To understand this changing reality and Hawaii's response to it, 
I'd like to begin with a snapshot of the current economic climate in 
Hawaii, then review the steps my administration took prior to passage 
of the Federal economic stimulus program to address the economic 
downturn. I would then like to review the funding Hawaii is expecting 
to receive as a result of the ARRA and how we are using these funds to 
re-establish conditions for growth. I'd like to conclude by talking 
about some important competitive opportunities available under the 
Federal stimulus bill and how Hawaii is well-poised to utilize these 
competitive grants.

                          ECONOMIC INDICATORS

    Looking at the basic benchmarks used to measure the economic well-
being of a community, Hawaii is relatively healthy, but is 
significantly less well off than we were only a year ago.
  --Our July unemployment rate was 7.4 percent, below the national 
        average of 9.5 percent, but significantly above the 4.3 percent 
        unemployment rate we enjoyed just 12 months ago.
  --Visitor arrivals declined 13.1 percent between fiscal year 2008 and 
        fiscal year 2009. Visitor spending dropped 15.1 percent during 
        the first half of calendar 2009.
  --As of July 2009, Hawaii's rate of growth in foreclosures was 14th 
        in the Nation. We currently rank 40th in the total number of 
        housing foreclosures.
  --Commercial real estate investments declined 44 percent for the 
        first 6 months of 2009 when compared to the same period a year 
        ago. This is usually considered a lagging indicator and 
        foreshadows continued difficulties ahead.
  --State tax revenues are projected to experience no growth this 
        fiscal year while inflation-adjusted personal income growth is 
        expected to grow for the calendar year at a very modest 0.4 
        percent.
  --For the first month of this fiscal year, the State experienced a 
        3.4 percent general revenue decline and last year State general 
        fund revenues declined 9.5 percent.
    The drop in revenues created a $2.8 billion funding shortfall in 
estimated revenues for our State budget through June 30, 2011. The 
State's entire general fund biennium budget passed by the Legislature 
just 3 months ago is $10.4 billion, but we will not have the money to 
support this budget. Under these circumstances, we cannot operate in a 
``business as usual'' manner. The size and shape of State government 
must change to reflect these economic and fiscal realities.

                FIVE-POINT PROACTIVE STATE RECOVERY PLAN

    Given these sobering trends, my administration launched a five-
point proactive economic recovery plan last year. Hawaii's five-point 
plan has the same objectives as the Federal economic stimulus effort--
to create and retain jobs and to lay the foundation for future success.
    The elements of the five point plan include:
  --Refocusing and Increasing Hawaii's Tourism Marketing and Outreach 
        Efforts.--Campaigns have been launched in targeted U.S. markets 
        such as the West Coast, traditional international markets such 
        as Japan, and emerging markets such as Korea and China. A 
        couple of weeks ago we were pleased to announce the intention 
        of Hainan Airlines to establish direct scheduled air carrier 
        service between Beijing and Honolulu. Hotel occupancy levels 
        are beginning to level off with a slight increase recorded in 
        July. The indication of some improvement in hotel occupancy 
        supports the effort being made to attract visitors at a time 
        when consumers are curtailing most discretionary spending, and 
        also reflects deeply discounted room rates.
  --Accelerating Public Infrastructure Investment.--Last September our 
        administration launched a plan to expedite $1.8 billion in 
        budgeted public construction projects that were ready to 
        contract within an 18-month period. These included roads, 
        bridges, school repairs, airport and harbor modernizations, and 
        other public works projects. I am pleased to report that 
        through July we started, awarded, or are in the process of 
        bidding out a total of $1.19 billion and anticipate meeting the 
        entire $1.8 billion goal by the end of September. We 
        established a website to permit public monitoring of the 
        progress of the effort, similar to what the Federal Government 
        is doing under ARRA. I invite members of this U.S. Senate 
        Committee to check our progress by visiting our State website 
        at http://hawaii.gov/cip.
  --Lowering Fees and Providing Tax Relief.--Economic history has 
        repeatedly demonstrated that we cannot tax our way out of a 
        recession. Keeping business fees and taxes low allows small 
        companies--the backbone of Hawaii's economy--to retain workers, 
        increase marketing, and weather a contraction. Early in my 
        administration we were able to lower fees and taxes on 
        businesses by an estimated $210 million and reduce personal 
        income taxes by $310 million. These efforts have helped cushion 
        what might otherwise have been a steeper decline in our State's 
        well-being. Some of this progress has been eroded by recent tax 
        increases passed by the State Legislature.
  --Attracting and Retaining Private Investment, Especially in the 
        Renewable Energy Sector.--Our administration has worked hand-
        in-hand with firms willing to invest in our State. We are 
        pleased that Walt Disney Enterprises has made significant 
        progress on its first major resort not connected to a theme 
        park. Also, in West Oahu the DeBartolo Development LLC, one of 
        the largest retail shopping center developers in the United 
        States, is following through on its $500 million commitment to 
        construct a major new project adjacent to Hawaiian Home Lands 
        and complementary to a new University of Hawaii campus. 
        Similarly, Forest City, Inc. is developing a master planned 
        community of nearly 2,000 homes on the island of Hawaii. First 
        Wind, LLC is investing in the expansion of its wind farm on 
        Maui and Castle and Cooke Ltd. recently completed construction 
        of a photovoltaic farm producing nearly 30 percent of the power 
        on the island of Lanai. And, most recently, Hawaii was proud to 
        be chosen as the site of the new $1.2 billion 30-meter 
        telescope project.
  --Maximizing Federal Dollars and Partnerships.--Hawaii has served as 
        the focal point for critical Federal investments in ocean 
        sciences, health research, astronomy, and the military. Pacific 
        Missile Range Facility on the island of Kauai played a pivotal 
        role in the recent response to North Korea's missile launching 
        efforts. Pearl Harbor, Hickam Air Force Base, Kaneohe Marine 
        Corps Base, and Schofield Barracks have a long history of 
        serving as America's first line of defense in the Pacific 
        region. Through the support of our Congressional delegation, we 
        have been able to realize continuing improvement and investment 
        in our military installations in Hawaii. And, we are proud of 
        the work of our soldiers, sailors, marines, Coast Guard, and 
        airmen for their role in supporting America's effort to 
        stabilize conditions in Iraq and Afghanistan.

                     CLOSING THE STATE SPENDING GAP

    In addition to pursuing this five-point recovery plan, my 
administration implemented decisions to address our State's immediate 
funding gap. We were able to address over $2 billion of the shortfall 
faced in our State budget. These decisions included:
  --Instituting an 8 percent across the board cut on all State Cabinet 
        agencies;
  --Severely restricting travel, new equipment purchases, and the 
        filling of vacant positions;
  --Refinancing State debt to reduce current payments;
  --Utilizing Federal funds, including ARRA funds, to address 
        shortfalls in critical areas such as Medicaid payments and 
        education;
  --Eliminating duplicative programs and programs with poor results.
    To address the balance of the $2.8 billion budget gap, we will need 
to reduce the State's labor costs which comprise 70 percent of our 
operating budget. My administration developed a well-thought out State 
employee furlough plan that will protect jobs and minimize the 
disruption to public services. We remain hopeful we will be able to 
implement furloughs, but are prepared to complete reduction in forces 
to lay off State workers if the public unions fail to support the 
furlough plan.

            AMERICAN RECOVERY AND REINVESTMENT ACT OVERVIEW

    This brings me to the American Recovery and Reinvestment Act (ARRA) 
and its impact on Hawaii's economy. The Act has made it possible to 
obtain Federal support for a range of activities and the opportunities 
it provides will be beneficial to the State.
    Hawaii is slated to directly receive $1.4 billion. This amount does 
not include funds going directly to individuals, such as tax credits 
and the bonus social security checks. Nor does it include direct 
Federal agency spending in Hawaii that will take place over the next 2 
years.
    It should be noted that a portion of these funds have not yet been 
received from the Federal Government. Our records show that between 
passage of the Act in February and now, the State government has been 
officially awarded $629.6 million, or about 46 percent of the total.
    We have been fortunate to have the assistance of Senator Inouye's 
office to gain familiarity with the ARRA programs. Jennifer Sabas, in 
particular, has been a source of support and a key facilitator bringing 
together stakeholders to coordinate the pursuit of grants available 
under the Federal stimulus program.
    In passing this bill, Congress recognized the importance of having 
the governor of each State serve as a single point of accountability 
for the expenditure of such large sums within a relatively short time 
frame. I take this responsibility seriously. I have asked my Chief of 
Staff, Mr. Barry Fukunaga, to play a central role in overseeing the 
receipt and expenditure of funds. I have also appointed Mr. Mark 
Anderson, Deputy Director of the Department of Business, Economic 
Development and Tourism, to serve as the ARRA Coordinator for the State 
of Hawaii. And, the State's Chief Economist, Ms. Pearl Imada Iboshi, is 
playing a key role in developing the databases and tracking systems we 
will use to manage these funds.
    My entire Cabinet understands the importance of spending the funds 
wisely and avoiding waste or misuse. Each cabinet director has an 
active part in receiving and overseeing those funds that impact 
programs within their respective departments. We participate in the 
many webcasts and conference calls arranged by Federal officials that 
provide guidance on the administration of the stimulus funds. I have 
personally had an opportunity to discuss directly with Vice President 
Biden the opportunities and challenges Hawaii is facing as we implement 
the Federal economic stimulus projects.
    Recognizing the importance of greater efficiency to expedite the 
administration of the Federal stimulus funds, my staff developed and 
lobbied for passage of Act 150 in the State Legislature. This Act 
addresses procurement hurdles that traditionally impede the award of 
public funds. The Act became State law on June 24th. It allows certain 
exemptions from the State procurement code, shortens the time frame for 
contract bids and awards, and provides a quicker resolution of bid 
protests by allowing the chief procurement officer of each department 
to resolve protests rather than using a protracted administrative 
hearings process.

                              ARRA FUNDING

    ARRA funds flowing to Hawaii are targeted for a number of areas, 
with the larger amounts in the following categories:
  --Health Care.--Hawaii is receiving $360 million that will help 
        offset State dollars used for Federal Medicaid services to low-
        income individuals. These funds will be paid out to the State 
        over a 27-month period. We are also receiving $64 million for 
        clean water projects and federally qualified health centers.
  --Education.--Hawaii's share is $279.6 million. $192 million will be 
        available in State fiscal stabilization funds, of which $157 
        million will be used to cushion funding reductions in K-12 
        public education and the University of Hawaii and community 
        colleges. Please note that the ARRA requires State Education 
        Agencies, in our case the State Department of Education (DOE), 
        to prepare and submit a spending plan to the governor before 
        Federal funds can be spent. The DOE will also directly receive 
        $87.6 million in formula funds for special education, education 
        technology, and Title I monies for disadvantaged youngsters.
  --Housing.--Hawaii is receiving a total of $52.2 million for housing, 
        including funds to assist affordable housing projects that are 
        experiencing funding gaps. I am pleased to point out that the 
        Hawaii Housing Finance and Development Corporation (HHFDC) just 
        awarded almost $9.9 million in Tax Credit Assistance Program 
        (TCAP) funding to three affordable housing projects--ensuring 
        prompt distribution of these moneys into Hawaii's housing 
        economy. Another $16.3 million of the above amount will be used 
        to renovate and repair public housing units.
  --Transportation.--A total of $246 million has been allocated to 
        Hawaii for transportation projects including roadway 
        resurfacing, bridge repairs, country transit, and airport 
        upgrades. This money will supplement our State-accelerated CIP 
        program described earlier. Our Director of Transportation, Mr. 
        Brennon Morioka, will be providing details on the State's 
        transportation expenditure plans later in this briefing.
  --Employment.--A total of $40.1 million for Hawaii will allow us to 
        extend unemployment benefits for those unable to find new jobs, 
        as well as fund various worker support programs.
  --Energy.--We expect to receive a total of $47.38 million in formula 
        grants, including funds for the State Energy Program, Energy 
        Efficiency and Conservation block grants, and the 
        Weatherization Assistance program, as well as two smaller grid 
        grants to the State Energy Office and the Public Utilities 
        Commission. We note that to date $14,985,330 has actually been 
        released to the State. Mr. Ted Liu will be providing details on 
        the planned expenditure of these funds.
  --Social Services and Law Enforcement.--$149.6 million in assistance 
        to help those who are most in need, including food stamps, 
        child care grants, Head Start funding, community service block 
        grants, seniors meals, and assistance to law enforcement units.

                        ARRA COMPETITIVE GRANTS

    In addition to the direct funding identified above, Hawaii is well 
positioned to compete effectively for moneys being made available to 
States on a competitive basis. We are focused on five areas which we 
believe can become the foundation for economic achievements in Hawaii 
in the years ahead. They are broadband communications, healthcare 
information technology, renewable energy generation and transmission, 
Race to the Top educational improvement, and harbors modernization.
  --Broadband Communications Deployment.--On August 14th Hawaii 
        submitted a comprehensive competitive grant application to the 
        Department of Commerce for its ``State Broadband Data and 
        Development Grant Program''--commonly referred to as broadband 
        mapping. The application proposes to spend $4.2 million, of 
        which $2.9 million would be Federal funds and the balance of 
        $1.3 million is in-kind resources. In addition to gathering 
        detailed data and mapping this information into a geographic 
        information system (GIS) for the entire State, our application 
        recognizes the importance of promoting public access for 
        education, health care opportunities, and commercial uses. My 
        administration is also working with the University of Hawaii on 
        a $44 million proposal to provide and upgrade fiber optic 
        connections to all public schools, libraries and university 
        campuses, as well as a smaller $1.5 million grant to improve 
        public computing for the underserved at public libraries and 
        community colleges.
  --Health Information Technology.--In keeping with the HITECH Act 
        portion of ARRA, the State is working with the Hawaii Health 
        Information Exchange (HHIE), a consortium of employers, health 
        plan providers, hospitals, physicians, clinics, members of the 
        academic community, and non-profit organizations to develop 
        Hawaii's application for Health IT funds. Because HHIE has been 
        in existence for a number of years and represents a broad 
        cross-section of the community experienced in this field, we 
        believe Hawaii's proposal for these competitive grant moneys 
        will reflect the real world issues that health information 
        databases must address.
  --Renewable Energy and Interisland Transmission Cable.--The Hawaii 
        Clean Energy Initiative launched in 2006 has been recognized 
        both nationally and internationally. We appreciate the 
        technical and financial support from the U.S. Department of 
        Energy that has allowed us to make significant progress in such 
        critical areas as changing the regulatory framework for energy 
        utilities, mapping the electricity grids for each island, 
        biofuels assessments, and deploying renewable sources including 
        wind, photovoltaic, solar, and ocean energy. The ARRA 
        competitive grants present an opportunity to build on these 
        areas of work. Working with Senator Inouye's office and with 
        other agencies and private energy companies, Hawaii will pursue 
        competitive grants in areas including smart grids and 
        distributed energy systems. Already Hawaii has been awarded 
        grants in electrification of the transportation sector in 
        partnership with Chrysler Corporation. We also received a 
        Hawaiian Electric Company utility integration grant for wind 
        power and a smart grid grant for the Hawaii Natural Energy 
        Institute.
  --Race to the Top.--Using national test scores (NAEP), Hawaii ranks 
        47th out of 51 States and the District of Columbia. A total of 
        187 out of 284 schools are now in corrective action or not 
        meeting annual yearly progress (AYP). Under the ARRA, the State 
        Department of Education must submit a plan to me before we can 
        start using the State Fiscal Stabilization Funds (SFSF), which 
        shows how we will address such fundamental issues as improving 
        struggling schools. To address this requirement, my ARRA 
        administration team has been working to develop a joint 
        Memorandum of Agreement (MOA) with the DOE to implement a 
        college and career ready curricula in every school. The MOA 
        builds upon the initiative my administration launched several 
        years ago to work with schools focused on STEM skills--science, 
        technology, engineering and math. To comply with additional 
        Federal requirements, Hawaii will need to change State law to 
        remove the cap on charter schools and not statutorily prohibit 
        the use of student-achievement data for evaluating teachers and 
        principals. When enacted, Hawaii believes we will be poised to 
        compete for Race to the Top Funds that will become available 
        under ARRA in October.
  --Harbors Modernization.--Our Department of Transportation will be 
        seeking TIGER grant transportation competitive funding to 
        undertake much-needed harbor improvement projects at the 
        Honolulu, Hilo and Kawaiahae Harbors. Given our State's 
        dependence on shipping between U.S. and foreign ports and 
        between our islands, harbor improvements are a critical area 
        for infrastructure modernization. The ARRA formula grant money 
        for transportation did not address this specific area, so the 
        competitive grants are the only opportunity to finance upgrades 
        to our harbors.

                      CHALLENGES AND OPPORTUNITIES

    Federal economic stimulus funds flowing into Hawaii come from a 
wide variety of funding sources and will touch numerous State 
departments, county governments, private companies, and even 
individuals. There are also stringent accountability and reporting 
requirements associated with the receipt and disbursement of funds. 
This presents a daunting task for States, particularly governors, who 
are charged with tracking the receipt and expenditure of ARRA moneys 
and providing accurate reports.
    ARRA encompasses two primary objectives--a high standard of 
accountability and a desire for expedient disbursement. This 
establishes competing conditions between the demands for immediacy and 
the necessity to be accurate and ensure that Federal dollars are spent 
in a manner that will have long-lasting impacts.
    As a result, challenges have been encountered in a number of areas.
  --Federal formats, guidelines and instructions for the required 
        reporting systems were delayed in reaching States. The 
        guidelines have also been changed after issuance, in some cases 
        more than once. State bid, procurement, and award documents 
        have had to be revised to reflect changing guidelines.
  --Hawaii, like many other States, has an older financial management 
        system that does not contain the capacity to track the 
        expenditure details required for reporting. This has 
        necessitated the need to develop technical ``work-around'' 
        alternatives to ensure we are able to incorporate into our 
        State financial tracking systems all of the reporting elements 
        necessary to meet the Federal reporting standards. Initial 
        provisions under the ARRA did not provide States with the 
        ability to apply for funds to address technical support 
        deficiencies. States are now being allowed to apply for some 
        limited funding.
  --State agencies are employing existing arrangements to channel funds 
        to organizations that are the ultimate beneficiaries of the 
        money. Some of these organizations have traditionally not had 
        experience in meeting Federal reporting obligations. As such, 
        they need to be trained on how to track and document the manner 
        in which they are using their ARRA dollars, and we are taking 
        the time to reach out to them to ensure they are aware of the 
        reporting obligations.
  --States are being asked to track funds through both the initial 
        recipient and all sub-recipients and vendors, which means the 
        money may pass through four or five layers before it gets into 
        the hands of the entity that actually spends it. For example, 
        money coming to Hawaii's Department of Labor and Industrial 
        Relations may flow to the Office of Community Services which, 
        in turn, parcels the funds to counties, who in turn distribute 
        the funds to non-profit service providers, who then send the 
        money to a private contractor who delivers the service or 
        goods. Given that all expenditures of $25,000 or more must be 
        tracked to the final spending entity, educating and acquainting 
        recipient organizations on their reporting obligations has 
        proven to take time.
  --It takes resources to manage and track the funds. Initial 
        guidelines did not allow States to use stimulus funds for 
        administrative purposes. We appreciate that the Federal 
        Government is allowing funding to be used for effective State-
        based oversight after States pointed out they were unable to 
        absorb these costs. Hawaii is currently preparing its 
        application for administrative funds.
  --Standard Federal cash-management requirements do not allow States 
        to draw down Federal dollars unless we can spend those dollars 
        within a short window of time--usually within 3 days. While 
        this provision is prudent for the Federal Government, it is 
        restrictive on States. In effect, what this means is States 
        must front the money for Federal projects and then seek 
        reimbursement from the relevant Federal agency. It is not yet 
        definitive whether these same Federal cash management 
        requirements will be applied to ARRA.
  --It is difficult to figure out what is being awarded to Hawaii since 
        the Governor's office often does not receive direct 
        notification from Federal agencies when an award to made to an 
        entity in Hawaii. This is a problem other States have also 
        voiced. It is particularly challenging to track down awards to 
        non-profits, for-profits, and research organizations.
    We encourage the Chair and members of the Senate Appropriations 
Committee to consider these points as you meet with State and local 
officials across the country. If steps can be taken to simplify the 
notification and reporting obligations, Hawaii would welcome engaging 
in that dialogue.

                              CONCLUSIONS

    Passage of the American Recovery and Reinvestment Act earlier this 
year has been beneficial for the State of Hawaii. The Federal funding 
comes at a time when our State is coping with the most severe economic 
and fiscal downturn since becoming a State. My administration has been 
executing a five-point plan to manage through the recession and 
position Hawaii for economic success in the decades ahead. The ARRA 
economic stimulus funds have fit into this effort and made it possible 
to fill funding gaps in State programs, repair and renovate State 
facilities, and protect those vulnerable populations hurt most by the 
economic downturn.
    Just as importantly, the economic stimulus funds build upon the 
five-point recovery plan my administration launched last year and 
position Hawaii to re-establish the conditions for growth. Our State 
congressional delegation has supported this effort and their role is 
appreciated.
    Finally, we believe key competitive grant opportunities will lay 
the foundation for a new economic base in the decades ahead. That 
economic base will be built on swift, accurate communications of voice 
and data; clean, renewable energy that is domestically produced; 
harbors and transportation systems that are state-of-the-art; and a 
skilled, well-educated workforce that is ready to compete nationally 
and internationally.
    Thank you for the opportunity to appear before you today.

    Chairman Inouye. As you know Hawaii's economy is improving 
much faster than most other States, it pleases me to note that 
our unemployment rate is the lowest in the Nation, at 7 
percent. Our national average is about 9.5 percent, there are 
some States that exceed 10 percent. And I've been doing some 
personal checking, and I've noted that most of our major hotels 
are now experiencing occupancy rates of over 80 percent--at 
reduced rates, however--but that means no one's getting fired 
there. And so, I'd like to congratulate the government of 
Hawaii and their subsidiaries for the good work you're doing, 
and I appreciate it very much.
    As you noted, you are the coordinator of funds. Do you find 
that cooperation and coordination between Federal, State and 
county governments is satisfactory, or do you think improvement 
should be made?
    Governor Lingle. I think the cooperation is very 
satisfactory, I think it was just a lot to do in a very short 
period of time. So, you had a brand-new Federal administration, 
some had capital secretaries, some didn't when ARRA got 
started. The rules were coming out--sometimes being changed--I 
thought it was completely understandable in the timeframe that 
was allotted--this was a huge amount of money with a lot of 
rules with high expectations, and I don't think anything that's 
occurred has been extraordinary or unexpected.
    And the cooperation--I hope the counties feel the same way, 
I think it has been very good and of course in your office, 
it's been outstanding for us.
    Chairman Inouye. There are very few experts in the Congress 
of the United States, and we just prayed that everything we did 
was correct and proper.
    For example, on the cash for clunkers, it was heavily 
debated, and there were many of us who were not too keen about 
it, but now it appears that it may be the most thoughtful 
program we had, so your testimony is very helpful, ma'am. Thank 
you very much.
    Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Governor Lingle, in your statement, you mentioned that you 
intend to--and that was your fifth point, I think, was to 
maximize the use of Federal dollars, and partnerships.
    In previous years, I must tell you, it was a joy working 
with your administration in obtaining and releasing the 
necessary State match for what we call Medicaid 
disproportionate share hospital resources--we call it ``DSH.'' 
These funds provide essential assistance to rural hospitals 
that care for the uninsured and Medicaid beneficiaries. I was 
concerned, of course, when the legislation which was providing 
necessary State match drawdown of $15 million of Federal 
assistance that Senator Inouye and I also helped to secure was 
vetoed. And I appreciate all of the work that's been done by 
the State legislature, and what they were doing, and of course 
they overruled the veto.
    I know that the Healthcare Association of Hawaii and their 
members truly depend on DSH and have told me how valuable it is 
to them over the years since additional measures have been 
taken by the State that are likely to increase the amount of 
unencumbered [indiscernible] care provided by hospitals. Will 
you reconsider releasing the necessary State resources to draw 
down the Federal resources to help strengthen our struggling 
hospitals that care for the uninsured and Medicaid 
beneficiaries?
    Governor Lingle. Senator Akaka, thank you very much for all 
of the help that you've given to the healthcare system here in 
the State, the help you and your office have always given us, 
whenever we're in Washington we've appreciated it very much.
    The challenge for the State of Hawaii at this time is the 
unprecedented drop in revenues that the State is facing, and 
even for those programs such as DSH, which is a match--so we 
come up with so many millions, and we get so many millions from 
the Federal Government--it's sort of like for a family that's 
facing some sale and it says, ``Buy One, Get One Free,'' but if 
you don't have the money to buy the one, it doesn't matter that 
you're going to get one free, and that's really the situation 
that we find ourselves in at this time.
    It's distressing that we don't even have money to be able 
to track this kind of matching funds, but as you know, the 
reduction in revenue has been now more than $2.8 billion, and 
the council on revenues will meet again, this week, Thursday, 
and I don't expect it to be a positive outlook. The best you 
could hope for is they don't go down further, but I think 
that's a little bit optimistic.
    As Senator Inouye pointed out, the occupancies are rising, 
and yet even at that, and even with the legislature raising the 
hotel room tax this year, our revenues from the hotel room tax 
are down substantially.
    I think your read about the impact on the city with the 
rail issue with excise being down, so at your request, I would 
take a look, but I don't want to raise expectations that that 
money might be released, certainly under the current 
circumstances. If there is a dramatic turnaround next year 
I'll--certainly at your request--look at that, but this is a 
very dire situation.
    As you know, we have passed out over 1,000 layoff notices 
to our employees. We're facing continuing declines--not only in 
the visitor industry and while I--I agree with Senator Inouye 
that comparatively--and I think I mentioned it just briefly in 
my remarks, comparatively we're doing quite well. So, whenever 
anyone asks me from the mainland, ``How is it going?'' I say, 
``Well, it's going okay,'' and I mean that compared to them. 
Because there are places--in Michigan, and in California, and 
Arizona, and New York and Florida--that are just having a 
horrible time, I mean, where you have unemployment, I think, 
just in Oregon, 11 or 12 percent kind of unemployment. So, I 
don't--you know, I don't want to make it seem worse than it is, 
but it's a very serious situation that we face.
    And I don't think there's going to be a quick recovery in 
Hawaii. We had, as you know, an economic panel on Saturday at 
the convention center, made up of State economists, and a 
former bank economist, and they're both on the council on 
revenues as well as the university economist, and they also 
don't see a quick recovery.
    So this is going to be a very challenging time for us. I 
continue to want to work with you, and with the legislature, 
Senator. But I don't want to raise expectations of releasing 
money that we just don't have, anymore.
    And I think it's important to know, the public--sometimes 
they'll ask, ``What happened to all of the money?'' You know, 
they'll say, ``Where did all of the money get spent?'' Because 
our budgets are prepared on projections, the money was never 
there--it's not that we went out and spent it, it's that we 
were projected to receive it over 2 years, and now the 
projections have been ratcheted back dramatically.
    And please take this in the spirit I mean it--unlike the 
Federal Government, we can't print money. So, we're just stuck. 
And that's why ARRA has been a big help to us, and Medicaid 
payments to us over the nine quarters have been important to 
us. We will do everything we can to maintain the highest 
possible healthcare for the people of this State, recognizing 
that our Government is not going to look the way it did a year 
or two ago. Not for a long, long time.
    We're hearing about it in the libraries having to close, 
the high school sports now being supported by the private 
sector--that's only the beginning of changes that are going to 
come. Changes that are necessary, simply because we don't have 
the money anymore. I'll do my best.
    Senator Akaka. Thank you very much, Governor. And I 
appreciate your response. And I want to wish you well in the 
State of Hawaii--well during this period.
    Thank you very much, Mr. Chairman.
    Chairman Inouye. As I noted in the opening statement, the 
record will be kept open for 2 weeks, and if witnesses have any 
desire to add anything, or correct, or amend, please feel free 
to do so.
    And Governor, if we may, we'd like to submit written 
questions to you.
    Governor Lingle. Please, Senator, I would appreciate that, 
and thanks for the courtesy of allowing me to speak first 
today, and share some of my experience with you, so far, with 
ARRA.
    Chairman Inouye. Thank you very much.
    Governor Lingle. Thank you.
    Chairman Inouye. Our next witness is the president of the 
senate of the State of Hawaii, the Honorable Colleen Hanabusa.
    Madame President, welcome.

STATEMENT OF THE HONORABLE COLLEEN HANABUSA, PRESIDENT, 
            HAWAII STATE SENATE
    Ms. Hanabusa. Chairman Inouye, Senator Akaka, aloha.
    Chairman Inouye. Aloha.
    Ms. Hanabusa. And thank you for this opportunity of 
allowing me to testify on behalf of the Hawaii State Senate, 
and the legislature as a whole.
    And I'd like to ask that--though I will not have the 
opportunity to recognize them all--I would like to point out 
that there are members of both the house of representatives and 
the senate here, because I believe that it is most appropriate 
in that what I am going to speak to is the budget of the 
legislature. And as everyone knows, it is that budget that is 
the major policy statement of the legislature.
    It was a difficult year for the legislature. Economic 
times--and we have been a legislature that has, for years past, 
been able to address almost everyone's needs quite 
appropriately. And this was a year that we were just saying, 
``No'' to everyone.
    Except when the ARRA came in, and that afforded us an 
opportunity to meet some of the needs. But what it did do was 
it forced this legislature to prioritize, and with your 
permission, I will tell you how this legislature prioritized 
the funds, because I think it is a great statement of what they 
did, and how they addressed the needs of the people.
    First of all, for the legislative budget, for the fiscal 
year 2010, which is what we are in now, there's a total of $679 
million plus which has attributed to the ARRA. It does, of 
course, include Consumer Price Index-related projects, as well. 
And for fiscal year 2011, it's $263 million, which is also 
attributing to the ARRA.
    What does this represent? Let me share that with you. As 
you know, our council of revenues projections went plummeting. 
When you compare from March 2008 to January 2009, we had 
declined by $2 billion, and as you know, the recent council 
projections has put us down another $600 to $700 million. 
Notwithstanding, when this budget was passed, this was what the 
budget said was important.
    In the area of human services, the legislature appropriated 
$2.6 million in 2010, and $3.1 million in 2011 to restore the 
Adult Dental Program. In addition, they partially restored 
immigrant health service, and these were items that were cut by 
the Governor for the reasons that she had explained earlier.
    And in total, the legislature appropriated $211 million for 
fiscal year 2010, and $105 million for fiscal year 2011 in the 
area of human services.
    Additionally, for temporary assistance for needy families 
(TANF) related matters, $20 million for fiscal year 2010, and 
$5 million for fiscal year 2011. And those are for the TANF 
contingency funds; $25 million in fiscal year 2010 and $6.25 
million in fiscal year 2011 for TANF emergency funds; $5.4 
million in each fiscal year of TANF's assistance for non-title 
IV E foster children, and $3.5 million in fiscal year 2010 and 
$900,000 in fiscal year 2011 for other assistance to non-title 
IV E children.
    In the area of health, the ARRA stimulus funds in the 
amount of $87 plus million for fiscal year 2010, and $15 plus 
million for the fiscal year 2011 for all of the related 
programs, including the Federal medical assistance percentages 
(FMAP) reimbursements, developmental disabilities, as well as 
adult mental health, to name a few.
    And in the area of public education, the legislature 
appropriated stimulus dollars for the following educational 
programs: $19.8 million for title I educational technology, $20 
million for Individual with Disabilities Education Act (IDEA) 
part B and IDEA part B preschool funds for 2010, and $116,000 
for the McKinney Vento Homeless Assistance Program.
    And in the interest of insulating the impact of the budget 
shortfall on the department of education (DOE), the legislature 
appropriated $56.6 million in stimulus dollars for education of 
each year of the biennium.
    What we are unable to tell you, however, Senators, is the 
status of those monies. We can tell you how the legislature 
prioritized, and how the legislature determined with the funds 
that you were so kind to help us secure, how we in the 
legislature felt that the money should be appropriated, but as 
Governor Lingle said, most of this program was intended to be 
routed through the executive branch, for reasons of 
accountability, as well as to expedite it.
    What we were fortunate of, very early on, Senator Inouye, 
was the fact that your office permitted the legislature to send 
representatives to sit in on some of their early negotiations, 
and as a result of that, we had a good sense of where the 
highway funds were being used, as well as where we thought the 
DOE funds were also going to be used. But for that, I think we 
would not have a very clear idea of how the funds were actually 
going to impact upon us.
    The Governor mentioned S.B. 21, which is act 150, and she 
spoke about the first part of the bill which, in essence has 
given relief in terms of procurement laws as well as rulemaking 
to expedite the use of the ARRA funds. There is a part two of 
the bill, which the legislature placed, and that is to have 
people sit there to watch the stimulus funds.
    Because, after all, it is the legislature who really always 
gets the question as to what's happening to the money. And as 
you both are probably aware, the way that this task force is 
formed is that each congressional member is asked to send a 
non-voting member, as the Governor's Office sends a non-voting 
member, Speaker Seay and myself appoint a public member and a 
legislator, and the minority members of both of our houses, the 
leaders appoint one public member to also sit and oversee the 
funds.
    We believe that it is only with that, that we will be able 
to answer that critical question that everyone has for us, 
which is, ``What happened to the ARRA monies?'' And though I am 
here to tell you--and to thank you for what you have done for 
us, I am unfortunately not able to say much more, because I 
don't really know--we don't really know--where the funds have 
actually been received and expended.
    We do know, for example, that in the competitive grant 
portion, we have been asked to be supportive of the harbors 
modernization, which is under the Department of Transportation, 
and the Smart Grid Program which, I believe, those are the two 
projects which the Governor has pointed to. However, other than 
that, I am not sure what the status of other competitive 
programs are.
    But, what we will do, hopefully, once we get the part two 
of the act 150 set up, that we would be able to answer these 
types of questions both for the public, and for you, as to 
where the funds have been, and how they have been effectively 
used.
    But let there be no mistake--but for the ARRA funds, I am 
not quite sure whether this legislature would have been able to 
sine die on time, or whether we would still be there, looking 
for the sizable chunks of money to try and balance our State 
budget.
    So, again, thank you very much for the opportunity and I'd 
like to also make special mention of my colleagues, because it 
was all of their hard work that has resulted in this budget, 
with a very strong policy statement of the commitment of the 
legislature to, really, those who need help, and of course to 
education, which we all say is our priority.
    Thank you very much.
    [The statement follows:]

                 Prepared Statement of Colleen Hanabusa

    Aloha Chairman Inouye, thank you for allowing me this opportunity 
to testify on behalf of the Hawaii State Legislature on the impact of 
the American Recovery and Reinvestment Act of 2009 (ARRA) stimulus 
funds on our State Budget.
    At the time the State Budget plan was finalized in May, the 
National Economic Outlook was uncertain and economic contraction was a 
severe reality in our islands. In February of 2009, the occupancy rate 
for Hawaii hotels was at its lowest rate since 1991, and total visitor 
expenditures fell 15.9 percent, according to the Department of 
Business, Economic Development, and Tourism. Oahu experienced the 
smallest part of the occupancy rate decline, and the island of Hawaii 
experienced the largest.
    Our island economy continues to be impacted by the loss of ATA and 
Aloha Airlines, two cruise ships, Hawaii Superferry, and the closure of 
Molokai Ranch. As of April of 2009, Hilo Hattie, a local clothing 
favorite, lost $4.6 million in its first 5 months in a Chapter 11 
bankruptcy reorganization filed on October 2, 2008. Construction slowed 
dramatically in 2009, which resulted in additional job losses. The 
State's unemployment rate is not expected to peak until the fourth 
quarter of 2009.
    Oil prices, the housing market, and U.S. credit remain wild-card 
factors that could have long-lasting impacts on the Hawaii economy.
    By statute, the Council on Revenues (COR) reports its latest tax 
revenue forecast to the Governor and the Legislature on June 1, 
September 10, January 10, and March 15 of each year. The revenues come 
primarily from the general excise tax and the State income tax. Since 
the March 2008 forecast, the COR has each time reduced its prediction 
of tax revenues for the coming fiscal years. From March 2008 to October 
2008, the COR general fund tax revenue projection through the upcoming 
biennium dropped by $1.341 billion.
    The Governor based her original Biennium Budget Request on the 
October 2008 COR projection. In early January 2009, soon after the 
Governor's budget was finalized and submitted to the Legislature, the 
COR revised its forecast downward; the projection was reduced by $637 
million through the coming biennium. Thus, from the COR March 2008 
projection to the January 2009 projection, general fund revenues had 
declined by nearly $2 billion.
    On March 12, 2009, the COR tax revenue outlook was again downgraded 
by $262 million over the biennium (down $92.8 million in the current 
year, $115.8 million in fiscal year 2010 and $53.4 million in fiscal 
year 2011).
    Never before has the State of Hawaii faced a declining revenue 
picture approaching the magnitude faced by the 25th Legislature. In 
fact, the $2 billion shortfall through the biennium budget as projected 
at the start of this legislative session seemed to have left many in 
various states of denial. While considerable budget reductions are a 
necessary component of a balanced financial plan, they are just one 
factor in aligning the State's expenditures and revenues.
    In an effort to close the budget shortfall, the Governor attempted 
to reduce each department's discretionary budget by 20 percent. The 
factors that determined the amounts deemed discretionary are still not 
entirely clear, and many departments did not meet the target reduction. 
Nonetheless, reductions resulting from this exercise and other 
adjustments made by the Governor resulted in a net decrease of 
operating costs of $209 million for fiscal year 2010 and $186 million 
for fiscal year 2011. Accounting for previously authorized collective 
bargaining amounts and other fixed cost adjustments resulted in the 
Governor's Fiscal Biennium 2009-2011 executive budget request of $5.361 
billion for the first fiscal year, and $5.464 billion the second.
    The Governor adjusted the biennium budget request to include 
reductions to account for the use of such funds as the Emergency and 
Budget Reserve Fund and ARRA stimulus funds. This, along with other 
adjustments, lowered the net executive budget request by $190 million 
and $69 million for fiscal year 2010 and fiscal year 2011, 
respectively.

                             HUMAN SERVICES

    Especially in these times tough economic times, the 25th 
Legislature found it important to support the Department of Human 
Services in its effort to provide services to those most in need. The 
Governor imposed a number of adjustments on this department's budget 
that would result in the loss of important services to the State's most 
vulnerable citizens.
    Of particular note is the Governor's elimination of Adult Dental 
Services for Medicaid eligible adults. The program provides for those 
that could not otherwise afford services such as exams, cleanings, and 
benefits for dentures. With the help of Federal ARRA funds, the 
legislature was able to appropriate $2.6 million in fiscal year 2010 
and $3.1 million in fiscal year 2011 to restore the Adult Dental 
Program, which was cut by the Governor. In addition, the legislature 
partially restored funding for Immigrant Health Services, also cut by 
the Governor. In total, the legislature appropriated $211 million in 
fiscal year 2010 and $105 million in fiscal year 2011 in ARRA funds for 
Department of Human Services programs.
    Additionally, the legislature was able to appropriate ARRA money 
and other Federal funds for the following TANF-related purposes: $20 
million in fiscal year 2010 and $5 million in fiscal year 2011 of TANF 
contingency funds; $25 million in fiscal year 2010 and $6.25 million in 
fiscal year 2011 of TANF emergency funds; $5.4 million each fiscal 
year, of TANF assistance for non-IV E foster children; and $3.5 million 
in fiscal year 2010 and $900,000 in fiscal year 2011 for other 
assistance to non-IV E children.

                                 HEALTH

    Within the Department of Health, the legislature was able to 
designate ARRA stimulus funds in the amount of $87,759,247 for fiscal 
year 2010 and $15,240,740 for fiscal year 2011, providing significant 
impact on the following programs and services:
  --Enhanced FMAP reimbursements will reduce the need of the following 
        general fund expenditures:
    --Developmental Disabilities: $14,473,221 in fiscal year 2010 and 
            $4,975,266 in fiscal year 2011;
    --Adult Mental Health: $2,531,764 in fiscal year 2010 and $870,310 
            in fiscal year 2011; and
    --Child and Adolescent Mental Health: $3,042,537 in fiscal year 
            2010 and $1,045,893 in fiscal year 2011.
  --Early Intervention to ensure compliance with the Federal 
        Individuals with Disabilities Education Act, Part C: $2,139,843 
        in fiscal year 2011.
  --Emergency Medical Services to improve communication between 
        ambulances and hospitals; and to implement a statewide 
        telecommunication system for critical patient information: $11 
        million in fiscal year 2010 and $7,865,000 in fiscal year 2011.
  --Environmental Management to provide grants for drinking water and 
        wastewater infrastructure improvements, diesel emissions 
        reductions for school buses, regulatory oversight of 
        underground storage tanks, and technical expertise for water 
        quality standards: $53,505,883 in fiscal year 2010.

                            PUBLIC EDUCATION

    The 25th Legislature recognizes the importance of providing a 
quality education to our children, to ensure their ability to thrive in 
the global society of today and tomorrow. Hawaii is fortunate to be 
receiving Federal stimulus dollars to support education and other State 
programs in the upcoming biennium. The Legislature appropriated 
stimulus dollars for the following educational programs: $19.8 million 
for Title I and Educational Technology in fiscal year 2010; $20 million 
for IDEA Part B and IDEA Part B Preschool funds in fiscal year 2010; 
and $116,000 for the McKinney Vento Homeless Assistance Program in 
fiscal year 2010.
    In the interest of insulating the school system from much of the 
impact of the budget shortfall, the legislature appropriated $56.6 
million in stimulus dollars for education in each year of the biennium. 
These funds are to be distributed between public schools and charter 
schools based on the latest enrollment projections. The Governor and 
the Department of Education are currently working on a memorandum of 
agreement on how the Federal assurances will be met.
    The receipt of Federal stimulus dollars also provided this 
legislature with an opportunity to make to provide a degree of funding 
stability to the charter schools' fiscal year 2010 and fiscal year 2011 
budget with an appropriation of $2.8 million in Federal stabilization 
funds.

                               CONCLUSION

    In appearing before this distinguished committee, I have tried to 
explain the extent to which the Federal ARRA Stimulus monies have 
helped the State of Hawaii with our budget shortfall. As with just 
about every other State, Hawaii found itself in deep need of 
assistance, and found the Federal ARRA Stimulus funds to be the 
stabilizing force in helping us to close our session submitting a 
balanced budget to the Governor.
    Unfortunately as our economy continues to backside the revenue 
stream that supports State services has continued to deteriorate. Since 
the end of the last regular session of the legislature the latest 
projection by the Council on Revenues showing a decline of $650.3 
million through the current biennium 2009-11 ($206.7 million for the 
fiscal year just completed, $228.7 million for fiscal year 2010, and 
$214.9 million for fiscal year 2011). The Governor, public employees, 
and Legislature will need to make substantial and undoubtedly difficult 
adjustments to public services that our citizens rely on. Charting a 
course that does not further contribute to economic decline and result 
in higher costs in the long term is the tremendous challenge we face.

    Chairman Inouye. I thank you very much, Madam President.
    You mentioned that part two of your act is now in the 
process of being implemented. How long will that take?
    Ms. Hanabusa. We have asked everyone to submit their names 
to us by this Wednesday. So, hopefully soon after that we will 
be able to convene that group, and they will be able to do--
which is to watch over where the stimulus monies are, and we 
will be able to report back to everyone as to how the 
administration is doing on the actual soliciting of competitive 
grants, as well as where the money has finally reached which 
departments.
    Chairman Inouye. Who is the convening authority of this 
group?
    Ms. Hanabusa. It is the legislature. And we anticipate what 
will happen--there are two legislators, one representing the 
senate, and one representing the house--and we anticipate that 
they will take the lead on it, and the legislature stands in 
the position of underwriting all of the costs associated with 
the convening of such a task force.
    Chairman Inouye. Will the organization be submitting 
reports to the Congress?
    Ms. Hanabusa. We hope that we will--we will be sure that we 
do, that is a request. And like I said, when all of the 
Members--yourself, Senator Akaka, Representative Abercrombie 
and Representative Hirono--submit their names, you will have a 
direct ear into the process, as well.
    Chairman Inouye. In your presentation on education--which 
you consider most important, and I agree with you--you 
mentioned something about homeless?
    Ms. Hanabusa. Yes, it is my understanding----
    Chairman Inouye. I'm just curious, what is that?
    Ms. Hanabusa. It is the McKinney Vento Homeless Assistance 
Program of 2010, which was to assist us in really underwriting 
the cost which the homeless have cost us. And as you know, for 
myself, Senators, and my district, the Oahu coast, is probably 
home to the largest homeless population. And it has caused 
great problems for many of the schools.
    I will tell you that one of our charter convergence 
schools--which was doing very well--I almost lost my principal 
because he got the influx of the students from what we call 
``the first tent'' homeless development out there. And what 
happened was--and he tells a very telling story--he says, ``The 
difference is, though we may have children on the coast who 
people may feel are unruly and misbehave, the one thing we have 
as an advantage is we know who their Tutu and the Grandma is, 
and their Grandpa, and we can go to see them, and they sort of 
whip them into shape.'' The problem is, what happens--I didn't 
mean it literally--in my days that was true, but--but what we 
have now, unfortunately, is the fact that because there is no 
tie with the community and there's no family structure, they 
are having a difficulty, so the education and the costs of 
educating these students have become so great, especially for 
charter-type schools who are limited, but this is all schools, 
but particularly those. Just because of proximity to these 
homeless shelters. This grant is supposed to help us underwrite 
a lot of that cost.
    Chairman Inouye. How much is involved?
    Ms. Hanabusa. What I understand, Senator, is $116,000 for 
2010, unless my figures are wrong, that is what I understand 
has been appropriated. When Ms. Hamamoto comes up here, she 
might have a better idea, but--and, of course, we're not the 
only place that has homeless shelter children in the State, as 
well, so I'm sure we're going to have to share with others.
    Chairman Inouye. Because of this crisis, what can we 
anticipate as your tenure of the senate, for our legislature--
how long will you be in session?
    Ms. Hanabusa. We are out of session now, and we will be 
coming back on the third Wednesday of January, which I believe 
is the 16th, if I'm correct. And we have, of course, as you 
know, constitutionally, basically 60 days, unless we extend 
ourselves.
    If we are unable to see a balanced budget, and if the 
Governor and the respective public sector unions are unable to 
reach some kind of agreement, I would anticipate that we may 
probably be in session a lot longer than what we anticipate it 
to be. But I am hopeful that they will reach some resolution, 
and with binding arbitration, we apparently are supposed to 
have a decision by December which would tell us. But that would 
also tell us whether there's a bigger pica for us to fill.
    Chairman Inouye. Thank you very much.
    Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Let me add my welcome to the president of the senate, 
Hanabusa, and thank you for your statement.
    As you mentioned--Hawaii and the rest of the country is 
fortunate to have this ARRA program, and the stimulus package, 
and as you know, we've received one point--or we expect to 
receive--$1.4 billion from this stimulus package. And, to date, 
I think we've just received about 46 percent of that money, and 
looking forward to the rest of it.
    And, of course, because of the situation and circumstance 
of our State, we've been trying to look for different ways of 
using that money for our people. In particular, I'm afraid, the 
hospitals will be confronted with increasing uncompensated care 
costs as more individuals lose their jobs, and their associated 
healthcare benefits, as well. Also cuts in Medicaid benefits 
and reductions in services for compact migrants----
    Ms. Hanabusa. That's right.
    Senator Akaka. Which will add to the uncompensated care 
that we're already struggling within our hospitals.
    I've appreciated all of the work that you've been doing to 
help secure the required State match for Medicaid 
disproportionate share hospital resources. My question to you 
is, what must be done to ensure that our hospitals can continue 
to care for our communities?
    Ms. Hanabusa. Senator, as you know, on the legislative end, 
we can appropriate, however, it's not ours to basically 
allocate and then expend, that is the Governor's 
responsibility, and Culiana, actually.
    I do, and am, familiar with what you are speaking of, 
because we just received a report that, especially for those 
who are Micronesians who--under the compact--are entitled to 
free care in the United States, and I have just heard of people 
saying that because of the failure on our part to--I mean, of 
the State--to get that match and release those funds, that we 
have some who are going to maybe not have their life-saving 
dialysis provided to them, because of the lack of funds.
    So, it is a major issue. We in the legislature this past 
session knew that healthcare was a major issue. And what we 
looked at was the one area that we could really effect, which 
is our own Health Systems Corporation--the HHSC, the Hawaii 
Health Systems Corporation. And we're in the process, there, of 
restructuring it, and even to permit them to sort of go out--
sort of a semi-privatization kind of issue--and go out and get 
other investors to come in, and to--and one of the key 
hospitals that is onboard for that is Maui Memorial, which has 
done an exemplary job of positioning itself.
    Those are the things that we could do in terms of 
legislation, to give them the necessary tools and powers to 
start to address these needs in the ways that they best can.
    Notwithstanding, however, on the issue of the matching 
funds, you know, we can put provisos, we can put everything, 
but one of the things that the budget permits the Governor to 
do, in the structure of our government permits the Governor to 
do--is to restrict funds. So, if she chooses to restrict 
funds--and, you know, these are difficult times, there's no ill 
motive attributed to that, at all. It's just that, once she 
chooses to restrict a particular fund, it then prevents $15 
million of matching funds to come in--that will have a major 
impact on whether or not those services can be provided. And I 
understand the Governor's analogy, if you don't have one, you 
get one free--it doesn't matter. But, you know, this is not a 
matter of a shoe, for example. This is a matter of really being 
able to provide twice the amount of care that people need for 
one-half of the amount.
    And it seems at that point the economics doesn't work out. 
You know, if you can get twice for one, for something life 
threatening, or something as major as healthcare--that's 
something that you would say, ``Hey, I'll take it out of 
something else, and I'll put it here, because this is the bang 
for my buck.''
    So, we also hope that the Governor will re-look at those 
particular budgetary items which the legislature did a very 
good job, in my opinion, of maximizing all Federal monies, 
matching funds, to actually come out and say, ``This is where 
the money should go.''
    Senator Akaka. President Hanabusa, we share a concern that 
a reduction imposed by the State administration will result in 
a loss of important services to what we call the vulnerable 
citizens.
    Ms. Hanabusa. That's right.
    Chairman Inouye. I have greatly appreciated all of your 
efforts to help protect our essential social services. Again, 
the question--what must be done to ensure that vulnerable 
citizens have access to the services they need?
    Ms. Hanabusa. Senator, I think the only thing that we can 
hope for is that the public--after hearing this testimony--and 
we have done others like this within the State legislature 
itself--that we're hoping that maybe the public would get--
outraged may be a strong statement--but maybe it has to get to 
that level, to say, ``Hey, it doesn't make sense. We can't not 
release these kinds of monies, where we can maximize our return 
by doubling the amount of Federal money that comes back to 
us.'' And this is a vulnerable population.
    I think it's a matter of policy, and it's a matter of 
priority, and this is something that I'm hoping that before all 
of your trips are over, and home--coming home--that you might 
be able to convince the Governor that these are the types of 
priorities that we need to have. We need to help the most 
vulnerable, because that, after all, is what I view is the 
purpose of government. Is, that's what we're here, first and 
foremost, to do.
    It's nice to be able to encourage and to stimulate the 
economy which, I think, the best way we can do that, Senator, 
is to encourage the construction. Which, when you hear Brennon 
Morioka come up, I hope that he, not only does his highways, 
but also does his harbors, and his airports, and everything 
else, and so do some of the others who can go in for the 
competitive grants. That we can help stimulate the economy.
    But for the money that comes in, I think we have to 
prioritize that to the people who need our help.
    Senator Akaka. Well, I want to thank you very much, 
President Hanabusa, for----
    Ms. Hanabusa. Thank you.
    Senator Akaka [continuing]. Those responses.
    Ms. Hanabusa. Thank you.
    Senator Akaka. Mr. Chairman, I want to apologize, and ask 
to excuse myself from the remainder of this hearing. I have a 
commitment with veterans on Lanai, and I'll be traveling there.
    And, again, I want to thank you again for the hearing, and 
for your really extraordinary leadership, not only to Hawaii, 
but to our country. I wish all of you well.
    Hawaii is a special place, as you know, and we care for one 
another. Implementation of the stimulus is something that 
Hawaii can really work on to help others out. We may be able to 
do that in Hawaii with the people of Hawaii.
    Thank you very much, Mr. Chairman.
    Chairman Inouye. I should note that on a per capita basis, 
the State of Hawaii has more veterans than any other State. And 
I'm pleased, if you don't know about it, Senator Akaka is the 
chairman of the Senate Committee on Veterans' Affairs. So, he's 
the honcho, here.
    Madam President, I thank you very much for your eloquent 
testimony.
    Ms. Hanabusa. Thank you. Thank you very much.
    Chairman Inouye. Our next panel consists of Rear Admiral 
Michael Giorgione, Commander of the Naval Facilities 
Engineering Command Pacific Fleet Engineering, U.S. Pacific 
Fleet.
    Mr. Brennon T. Morioka, director of the Hawaii Department 
of Transportation.
    Mr. Abraham Wong, Division Administrator, Federal Highways 
Administration, U.S. Department of Transportation, and Dr. 
David Lassner, vice president for information technology, and 
chief information officer of the University of Hawaii.
    Gentlemen, I welcome you all, may we begin with the 
Admiral.
STATEMENT OF REAR ADMIRAL MICHAEL A. GIORGIONE, CEC, 
            UNITED STATES NAVY, COMMANDER, NAVAL 
            FACILITIES ENGINEERING COMMAND PACIFIC 
            FLEET ENGINEER, U.S. PACIFIC FLEET

    Admiral Giorgione. Mr. Chairman, thank you.
    Mr. Chairman, I am pleased to appear before you today to 
provide an overview of the Department of Defense's support of 
the American Recovery and Reinvestment Act, ARRA, of 2009 in 
Hawaii.
    The Department of the Navy: The Department received 
approximately $112.7 million in ARRA funds for five projects on 
Oahu, and two projects on Kauai. To date, three operations and 
maintenance, O&M projects, programmed at $56.8 million for 
wharf and runway repairs at Naval Base Pearl Harbor, and 
Pacific Missile Range Facility, Kauai, have been awarded, and 
one Milcon project programmed at $19.4 million for a new child 
development center at Marine Corps base, Hawaii, has been 
awarded. All four projects were awarded to companies 
headquartered in Hawaii.
    One remaining O&M project, programmed at $3.9 million for 
window replacement at Marine Corps base, Hawaii, is scheduled 
to be awarded by September 30, 2009, and one O&M project, 
programmed at $32.6 million to install photovoltaic systems at 
Naval Base Pearl Harbor, and PMRF (Pacific Missile Range 
Facility), is scheduled to be awarded by December 30, 2009.
    The Department of the Army: The Army Corps of Engineers, 
Honolulu District, received approximately $48.9 million in ARRA 
funds to design and construct 30 facilities sustainment, 
restoration, and modernization projects. The 30 projects 
consist of 4 Air Force projects, totaling $2.4 million, and 26 
Army projects totaling $46.5 million.
    One project has been awarded for construction at $1.2 
million. Five projects totaling $4.7 million are scheduled for 
award by September 30, 2009, and the remaining 24 projects, 
totaling $42.8 million will be awarded in fiscal year 2010. 
Most of these projects are within the capability of small 
businesses, so the use of small businesses will be used to the 
maximum extent possible.
    The Director of Public Works, U.S. Army Garrison Hawaii, 
received approximately $24.9 million, excuse me--$29.4 million 
in ARRA funds to design and construct 36 projects. Six projects 
have been awarded for construction at $8.1 million.
    ARRA civil works projects in Hawaii: The Corps of Engineers 
also executes non-Department of Defense work under the civil 
works authority to develop, manage, protect and enhance our 
Nation's water and related land resources for commercial 
navigation, flood risk management, ecosystem restoration and 
allied purposes. Through the civil works authorities, the 
Department also provides emergency services for disaster 
relief, and administers the Army's regulatory program.
    The Honolulu District's scheduled $5.2 million of ARRA 
funds for their operations and maintenance and regulatory 
programs. They have obligated for contracts, $700,000 for 
maintenance dredging of Haleiwa Harbor, and intend to identify 
for revocation $3.9 million that was not needed, due to the 
availability for fiscal year 2009 funds to do the scheduled 
work.
    Work to upgrade the Regional Visitors Center at $348,000 is 
scheduled for fiscal year 2010. The regulatory program has also 
scheduled $200,000 of ARRA funds to be obligated over fiscal 
year 2009 and fiscal year 2010.
    Department of the Air Force: The Department received 
approximately $47.4 million in ARRA funds for 26 projects on 
Hickman Air Force Base on Oahu. Of these 26 O&M projects, 22 
projects in the amount of $11.5 million have been awarded, and 
all 22 projects were awarded to companies doing business in 
Hawaii. The remaining four projects were programmed at $35.9 
million, with the single-largest project--repairs to Pacific 
Air Force's headquarters building--programmed at $31.5 million. 
All four projects are scheduled to be awarded by September 15, 
2009.
    Conclusion: Mr. Chairman, in total, the Department of 
Defense has received approximately $244 million of ARRA 
funding, and I can assure you that we are committed to the 
expeditious execution of ARRA projects to support the 
Department of Defense in the State of Hawaii. Thank you for 
your continued support of the armed services, and thank you for 
the opportunity to provide this statement today.
    [The statement follows:]

               Prepared Statement of Michael A. Giorgione

    Mr. Chairman, I am pleased to appear before you today to provide an 
overview of the Department of Defense's support of the American 
Reinvestment and Recovery Act (ARRA) of 2009 in Hawaii.

                         DEPARTMENT OF THE NAVY

    The Department received approximately $112.7 million in ARRA funds 
for five projects on Oahu and two projects on Kauai. To date, three 
Operations & Maintenance (O&M) projects programmed at $56.8 million for 
wharf and runway repairs at Naval Base Pearl Harbor and Pacific Missile 
Range Facility (PMRF), Kauai, have been awarded, and one MILCON project 
programmed at $19.4 million for a new child development center at 
Marine Corps Base Hawaii has been awarded. All four projects were 
awarded to companies headquartered in Hawaii.
    One remaining O&M project programmed at $3.9 million for window 
replacement at Marine Corps Base Hawaii is scheduled to be awarded by 
September 30, 2009, and one O&M project programmed at $32.6 million to 
install photovoltaic systems at Naval Base Pearl Harbor and PMRF is 
scheduled to be awarded by December 30, 2009.

                         DEPARTMENT OF THE ARMY

    The Army Corps of Engineers, Honolulu District received 
approximately $48.9 million in ARRA funds to design and construct 30 
facilities sustainment, restoration and modernization projects. The 30 
projects consist of four Air Force projects totaling $2.4 million and 
26 Army projects totaling $46.5 million.
    One project has been awarded for construction at $1.2 million. Five 
projects totaling $4.7 million are scheduled for award by September 30, 
2009 and the remaining 24 projects totaling $42.8 million will be 
awarded in fiscal year 2010. Most of the projects are within the 
capability of small businesses, so the use of small business will be 
used to the maximum extent possible.
    The Directorate of Public Works, U.S. Army Garrison Hawaii received 
approximately $29.4 million in ARRA funds to design and construct 36 
projects. Six projects have been awarded for construction at $8.1 
million.

                  ARRA CIVIL WORKS PROJECTS IN HAWAII

    The Corps of Engineers also executes non-Department of Defense work 
under their Civil Works authorities to develop, manage, protect and 
enhance our Nation's water and related land resources for commercial 
navigation, flood risk management, ecosystem restoration and allied 
purposes. Through the Civil Works authorities, the Department also 
provides emergency services for disaster relief and administers the 
Army's regulatory program.
    The Honolulu District scheduled $5.2 million of ARRA funds for 
their Operations and Maintenance and Regulatory programs. They 
obligated for contract $700,000 for maintenance dredging of Haleiwa 
Harbor and intend to identify for revocation $3.9 million that was not 
needed due to availability of fiscal year 2009 funds to do the 
scheduled work. Work to upgrade the Regional Visitors Center at 
$348,000 is scheduled for fiscal year 2010. The Regulatory Program has 
also scheduled $200,000 of ARRA funds to be obligated over fiscal year 
2009 and fiscal year 2010.

                      DEPARTMENT OF THE AIR FORCE

    The Department received approximately $47.4 million in ARRA funds 
for 26 projects at Hickam Air Force Base on Oahu. Of these 26 O&M 
projects, 22 projects in the amount of $11.5 million have been awarded 
and all 22 projects were awarded to Hawaiian companies.
    The remaining four projects are programmed at $35.9 million, with 
the single largest project, repairs to Pacific Air Forces Headquarters 
Building, programmed at $31.5 million. All four projects are scheduled 
to be awarded by September 15, 2009.

                               CONCLUSION

    Mr. Chairman, in total, the Department of Defense has received 
approximately $244 million of ARRA funding and I can assure you that we 
are committed to the expeditious execution of ARRA projects to support 
the Department of Defense and the State of Hawaii. Thank you for your 
continued support of the Armed Services and thank you for the 
opportunity to provide this statement today.

    Chairman Inouye. Thank you very much, Admiral.
    As a result of these DOD investments in Hawaii, how many 
jobs have been created, and how many jobs have been retained?
    Admiral Giorgione. So, the one thing I can tell you is that 
all of the work, to date, has been awarded to companies already 
doing business in Hawaii. Whether they're headquartered here, 
small businesses, subcontractors, et cetera. So, I don't know 
that that has created more jobs, but I would venture to say it 
has certainly retained everything in the workforce that we've 
already been accustomed to working with.
    Chairman Inouye. When will all of the contracts be let out?
    Admiral Giorgione. For all of the services, we expect to be 
done by March/April 2010, sir.
    Chairman Inouye. So, you won't see any results until next 
summer?
    Admiral Giorgione. That's correct, sir. Some of the work 
has started coming out of the ground, much of it has yet to be 
awarded.
    Chairman Inouye. Do you find that the coordination that you 
need, and cooperation from other agencies sufficient?
    Admiral Giorgione. The coordination is not as prevalent 
as--I mean, not as necessary, because it's within most of our 
facility sustainment, and Milcon programs, and things that we 
issued a date. None of these projects have required any special 
environmental impact statement or anything of that nature, 
involving other agencies, but wherever coordination was needed, 
it's been seamless, cooperative, positive and allows us to 
execute the program, as needed.
    Chairman Inouye. Your testimony is most reassuring.
    Admiral Giorgione. Yes, sir.
    Thank you, Mr. Chairman.
    Chairman Inouye. Our next witness is the director of the 
Hawaii Department of Transportation, Mr. Morioka.

STATEMENT OF BRENNON MORIOKA, DIRECTOR, HAWAII 
            DEPARTMENT OF TRANSPORTATION
    Mr. Morioka. Good morning, Chairman Inouye, thank you very 
much.
    My name is Brennon Morioka, I'm the director for the State 
department of transportation (DOT), and we're very pleased to 
provide you with testimony on the status of many of our ARRA 
projects, as well as give you a little of the background of the 
process that we went through, and some of our accomplishments 
in utilizing the funds provided by ARRA.
    As a State, we are extremely grateful for the additional 
funds that ARRA provided as its--we're certain that it will 
assist our contractors and suppliers, and local companies in 
these tough economic times. The Federal stimulus funds will 
further support Hawaii's efforts to focus on investing, 
properly, in the repair, maintenance and modernization of many 
of our transportation infrastructure throughout Hawaii, create 
jobs and help stimulate our economy.
    In going through the process to determine what State and 
county projects we're going to be utilizing ARRA funds, it did 
require an unprecedented level of cooperation and collaboration 
amongst our Federal, State, and county agencies, namely our 
Federal Highways Administration--that we do want to thank them 
for everything that they did to help facilitate our process--
our own State department of transportation, the four county 
mayors, and their department of transportation directors--Oahu 
Metropolitan Planning Organization, as well as our legislative 
partners, especially Representative Umashta, and Senator 
Sotsuey who played--in the initial roles early on in the 
discussion.
    We also worked very closely, Senator, with your office from 
the very beginning, often much in advance of the entire ARRA 
discussion, as everyone kind of knew what might be coming down, 
and so your office was very helpful in helping us understand 
how to prepare, and make use of some of the initiatives that 
our administration had already started with the CIP Strike 
Force.
    And due to the strong level of collaboration amongst all of 
our various agencies and administrations--both State and 
county--we do believe that Hawaii has one of the most diverse 
project lists in the country that will be utilizing ARRA.
    We did meet--I met personally, along with my Deputy 
Director Gerald Sumato of our highways division--with each and 
every mayor, as well as their staffs--and so I do thank them 
for making themselves and their staffs available, because there 
was a very short fuse that we had to deal with, and so we had 
to make due with trying to move schedules around in order to 
accommodate. And so, I do thank them for their availability, 
otherwise I don't think that this would have been possible for 
us to meet the original deadlines of certifying our projects.
    The four counties are receiving at least one-half of the 
stimulus funds for highways, for related projects, which is far 
more than they typically receive through the normal formula 
process, so they are enjoying many of the benefits that ARRA is 
providing, in terms of assisting them with some of their 
infrastructure projects.
    Some of the projects in the original determination on how 
we were going to vet the projects, obviously they had to meet 
all of our timelines, in terms of project development and 
completion, in order to fully realize all of the ARRA monies. 
We had to focus on economically distressed areas, especially 
the Big Island, and Molokai, as required by ARRA.
    We wanted to have a diversity of projects that would employ 
a wide range of construction trades. And then, also, we wanted 
to look at projects that might have secondary benefits of 
promoting future job growth, such as low-cost housing, and I 
think that's a couple of projects that you see, especially on 
the mid-level road on the Big Island, is namely that, in order 
to open up, so that we can have additional construction, as 
well. And then we wanted to provide general transportation 
benefits to road and highway users.
    So, we also took into account in the selection of projects, 
projects that would employ people for a longer period of time--
namely 2 or 3 years--rather than just going toward the easy 
resurfacing projects a number of other States have, that might 
just employ people for 2 to 3 months. If we employ people 2 or 
3 months, it's a band-aid fix, you know, we're right back where 
we started, with a lot of people back on the unemployment roll. 
So we wanted to make sure--knowing that these challenging times 
would last another that the projects that we selected would get 
us through these tough times, and back into the point where 
both the public and private sectors would be able to flourish 
with our CIP programs.
    You know, the Governor had mentioned that nationally, 49 
percent of all ARRA funds for highways has been utilized for 
resurfacing, and compared that with 11 percent here in Hawaii, 
and I think that just goes toward the counties, and the State 
DOT, realizing that if we took a little bit more time, maybe 
just another month, we could put out the projects that would 
really be meaningful to our labor force here, in Hawaii, and 
put them to work in a much more prolonged way, rather than a 
very short-term period.
    And so, I think, you know, in light of a lot of the 
criticism nationally on a lot of States that really did not 
look at a lot of their own backlog for infrastructure, you 
really can't say that here for Hawaii, because we do have a lot 
of projects of bridge--bridge maintenance, bridge repair, 
bridge replacement, we have brand-new roads that we'll be 
constructing, a brand-new bike path on Kauai, by Kauai County, 
as well as a lot of intelligent transportation system 
investments, here on Oahu, by the city and county of Honolulu, 
as well as the DOT.
    Just a quick status on some of the highway projects that we 
do have, we initially went out with a list of 19 highway 
projects that we certified, as a part of the 1511 
certification--10 State and 9 county that were selected as part 
of our implementation.
    Nine out of the ten State DOT ARRA projects have already 
been advertised, awarded, and five already have notice to 
proceed. We do anticipate the remaining four State projects to 
receive to notice to proceed by the end of this month.
    Two out of the nine county projects have already been 
obligated, and one-third is in the process right now. And just 
a note on the county projects--ARRA provided a framework of 
rules that set different timelines for different projects and 
for different jurisdictions. The counties were on a very 
different timeline then the State projects, as outlined in 
ARRA, but I think what's key to note, here, is that the--that 
ARRA allowed counties--as well as some of the straggling State 
projects--to be authorized by February or March of next year, 
2010.
    We don't believe that that necessarily meets the intent of 
what ARRA was about, and that's creating jobs and stimulating 
the economy, so we as a group--the administration, and our four 
counties--all agreed that we would advertise all of--100 
percent of--our ARRA funds for highways by the end of October 
2009. So, I believe that we--Hawaii as a State--will be far in 
advance of many, many other States by the time that we get 
through this, through this--through the end of the year. And I 
think that we will be putting ourselves in a great position to 
take advantage--should there be additional excess funds by 
other States, who have not been able to fully utilize them by 
the milestones set by ARRA.
    So, I think Hawaii will be very well positioned--and we do 
have a whole slew of lists of plan B projects that we had ready 
to go, both at the State level, and all four counties, as well.
    Just a quick update--oh, and on top of that, because we 
have received favorable bids on projects that we've already 
gone out and advertised, we have been able to realize $17 
million of savings to State projects, and we were able to add 
three additional projects to our certified list, under ARRA, so 
we'll be going out to bid, within the next 3 weeks, on those 
additional project.
    Airports, we did receive $76.5 million in allocations, 
either through the Federal Aviation Administration, or the 
Transportation Security Administration. The FAA project--we 
started construction on an apron, parking apron, in Kahului 
Airport. On June 19, the contract amount was $17 million, of 
which $15 million will be paid through ARRA. We did receive 
monies from TSA for explosive detection systems--one in 
Kahului, and one at Honolulu International.
    The Kahalui project is approximately 80 percent complete, 
And the Honolulu International project will begin active 
construction in a couple of months, once some of the equipment 
and materials arrive here in Honolulu.
    Knowing that ARRA's intent was to expedite projects and get 
them out on the street as soon as possible, we did take a few 
steps on the State level to accelerate our project delivery. We 
shortened the time between award from 60 days to 30 days, and 
we shortened the time to issue a notice to proceed from a 
contractor from 90 days to 45 days.
    We've also coordinated with regulatory agencies, such as 
our department of health, in helping them put ARRA projects--
whether they're State projects or county projects--on the top 
of their list, so that they are addressed first, so we can take 
advantage of these available funds. And both Governor Lingle 
and Senate President Hanabusa had mentioned the streamlining 
for some of the new--the new legislation passed this past 
legislative session.
    So, in closing, I do want to thank you for this opportunity 
to brief you and provide you an update on the status of our 
projects, and for all of your efforts and your staffs' efforts, 
as well as the remainder of our congressional delegation, in 
bringing these ARRA moneys, and making them available to 
Hawaii, as I do believe we are taking full advantage of them. 
We are meeting the intent, we are meeting all of the 
milestones, and we believe that Hawaii, in general, will be 
beneficiaries of these monies.
    Sort of, thank you very much for this time.
    [The statement follows:]

                Prepared Statement of Brennon T. Morioka

    The State Department of Transportation (DOT) is pleased to provide 
this testimony that outlines our current status and accomplishments in 
utilizing funds provided by the American Recovery and Reinvestment Act 
(ARRA) of 2009.
    We are extremely grateful for the additional funds that were 
provided by this act to the State of Hawaii as it will help 
contractors, suppliers, and local companies in these tough economic 
times. The Federal stimulus funds will further support Hawaii's efforts 
to focus on investing in the repair and modernization of Hawaii's 
infrastructure, create jobs and stimulate our local economy.
    Determining which State and county road projects would be funded 
required an unprecedented level of coordination and collaboration 
between the Federal Highways Administration, the State Department of 
Transportation, the four county mayors and their transportation 
directors, and the Oahu Metropolitan Planning Organization. We also 
worked closely with Senator Inouye and his staff and would like to 
thank them for their input and support.
    Projects were first evaluated on their ability to meet the ARRA 
milestone requirements. It was also important that we ensured the 
projects were fairly distributed geographically, including in 
economically distressed areas and other regions where the project would 
have an impact in the creation of jobs. We also put an emphasis on 
projects that had the potential to employ a diverse cross section of 
construction trades.
    A summary of the Department's ARRA program is as follows:

                     SELECTION OF HIGHWAY PROJECTS

    The selection of projects to be undertaken with ARRA funds was a 
result of a collaborative effort between the four counties and the 
State DOT to ensure an equitable distribution of ARRA funds. After a 
list of prospective county and State projects was compiled by DOT, we 
met with the Mayors of each county to discuss and identify a list of 
projects statewide.
    The final selection of projects was based on the following 
criteria:
Projects:
  --That would meet the ARRA timelines;
  --In economically distressed areas (Hawaii and Molokai as of March 
        2009);
  --That would employ a diversity of trades;
  --That would provide secondary benefits in promoting future job 
        growth such as low cost housing; and
  --That would provide general transportation benefits to road and 
        highway users.
    It should be noted that the counties received at least half of the 
ARRA funds for ready-to-go projects, which is a far greater amount of 
funding typically provided through the typical formula funds of the 
Federal aid program.
    We also took into account the selection of projects that would 
employ people over a longer period of time (2-3 years) versus other 
jurisdictions that selected projects that were easy and quick to get 
out but would employ people over a shorter period of time (2-3 months). 
How Hawaii is investing taxpayer monies is important. We felt it 
important to make sure the investment of these funds would go towards 
extended employment and longer term benefits.
    We are aware that 49 percent of ARRA funds spent for highway 
systems on a national level has or will be used on resurfacing 
projects. It is important to note that in comparison; only 10.8 percent 
of the ARRA funds apportioned to Hawaii will be used on resurfacing 
projects.

                       STATUS OF HIGHWAY PROJECTS

    Currently of the 19 (10 State and 9 local) original ARRA highway 
projects, 9 of the 10 State projects have been awarded and 5 have been 
issued notice-to-proceed. By the end of August, the remaining four 
should also be issued notices-to-proceed.
    Federal funds for two out of the nine county projects have already 
been obligated with a third soon to be approved by FHWA. Our goal 
continues to have allocations being drawn for all projects by the end 
of October.
    Because we were able to realize lower bid proposals for ARRA-funded 
projects, three more road improvement projects have been added to the 
certified list amounting to an additional $17 million in projects for 
the State. These additional HDOT projects are scheduled to be 
advertised in the next 3 weeks.
    We also remain committed to provide assistance to Economically 
Distressed Areas (EDAs), in this case Molokai. The current unemployment 
rate for Molokai is 13.9 percent as of June 2009; significantly higher 
than the national unemployment rate of 9.0 percent.

                      STATUS OF AIRPORTS PROJECTS

    The Airports Division received three ARRA grants through the FAA 
and TSA. The following is a project status report as of August 12, 
2009:
  --The FAA project to rehabilitate the aircraft parking ramp at 
        Kahului Airport started construction on June 19, 2009 and is 2 
        percent complete. The total project amount is $17 million with 
        a grant amount of $15 million.
  --The first TSA project is for an in-line explosive detection system 
        at Kahului Airport. The project is approximately 78 percent 
        complete. The total project amount is $23,813,066 with a grant 
        amount of a little over $7 million.
  --The second TSA project is for an in-line explosive detection system 
        at Honolulu International Airport. The project will begin 
        construction in November 2009. The total project amount is over 
        $58 million with a grant amount of $24.6 million.

                            EXPEDITING WORK

    Recognizing the importance of accomplishing bid, award and 
implementation of ARRA projects, we have:
  --Shortened the time to award bids from 60 days to 30 days.
  --Shortened the time to issue notice-to-proceed from 90 days to 45 
        days.
  --Coordinated with State and County regulatory agencies Department of 
        Health to obtain priority processing of permits for ARRA 
        highway projects.
  --Implemented new legislation to the Hawaii Public Procurement Code 
        that allows streamlined procurement for ARRA projects.

                                CLOSING

    Thank you for providing us an opportunity to brief you on Hawaii's 
efforts to use ARRA funds prudently and expeditiously. These projects 
demonstrate how the State, counties, and Federal agencies can work 
together to serve the critical needs of Hawaii's residents and focus on 
investing in the repair and modernization of Hawaii's transportation 
infrastructure and create jobs for the people in our State.

    Chairman Inouye. I thank you very much, Mr. Director.
    I've been home, now, for 10 days, and during those 10 days, 
I do watch television every so often, and I see this commercial 
coming on--commercial that suggests that most of the workers 
that are being hired for our projects are from abroad, not from 
here. Do you have any comment on that?
    Mr. Morioka. Well, I can only comment on the transportation 
projects, and all of the ARRA projects that we have awarded 
have gone to local contractors.
    Chairman Inouye. So, there is some discrepancy there?
    Mr. Morioka. You know, I've only seen one of those 
commercials, and it is--I'm not sure what the terms of those 
contracts were.
    But anytime we deal with Federal contracting, as well, 
there are provisions that prohibit regional--you know, 
selecting contractors based on locale. And I think, in terms of 
the way that we put out our contracts at DOT, and working with 
Federal highways, or FAA, the majority of our contracts do end 
up with local contractors. I think they are the most suited in 
terms of ramp up very quickly, because all of their equipment 
is here, and so, you know, we--as a department--we have not had 
any issues in this area.
    Chairman Inouye. Are you confident that your department 
will be meeting all of the deadlines?
    Mr. Morioka. Absolutely.
    Chairman Inouye. You're one of the very few in the United 
States who can say that.
    And I congratulate you on that.
    Then you must find that your coordination with other 
agencies, the State and county, are good?
    Mr. Morioka. Yes, it has. And actually, we were at a 
meeting in Seattle in which some of the new administration from 
Federal Highways Administration were there, and one of the 
things that I did point out to the Administrator of the Federal 
Highways Administration--Jeff Paniotti--was that there had been 
unprecedented cooperation--not just with our local office, but 
with many of the other Federal highways in their headquarters.
    And so, we have been very appreciative of all of that 
effort.
    Chairman Inouye. And your coordination, cooperation with 
county governments are good?
    Mr. Morioka. We are doing our best, I think it is 
unprecedented in the amount of communication. I know the city 
and county of Honolulu recently passed their self-certification 
process that allows the State to move a lot quicker.
    I do receive calls from some of their directors for 
assistance with some of the permitting process, and I do what I 
can to help accelerate those, as well.
    Chairman Inouye. Can you provide the committee with some 
estimate on the number of jobs that have been created, and 
retained, as a result of this spending?
    Mr. Morioka. Yes, I can.
    [The information follows:]

                                                                     STATE AND COUNTY PROJECTS USING FEDERAL RECOVERY FUNDS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 Funding
priority        Jurisd.           Island                                Project title                                      Status                 Cost                       Notes
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
      S1 STATE               Oahu........  H-1, Seismic Retrofit, Farrington Highway & Makakilo Separation,     NTP 7/13/09.............          $870,450  ..................................
                                            Oahu.
      S2 STATE               Oahu........  Kamehameha Highway, South Punaluu Bridge Replacement, Oahu.........  NTP 8/26/09.............       $15,298,510
      S3 STATE               Hawaii......  Hawaii Belt Road, Clean & Paint Steel Members, Kukuaiu, Kuwaikahi,   NTP 9/8/09..............        $4,301,949
                                            Ninole and Maulua Bridges, Hawaii.
      S4 STATE               Kauai.......  Maalo Road Resurfacing, MP 0-MP 1.0, Kauai.........................  NTP 7/20/09.............          $734,333
      S5 STATE               Kauai.......  Kuhio Highway Resurfacing, Kawaihau Road to Kapaa Bridge, Kauai....  NTP 7/20/09.............        $1,026,666
      S6 STATE               Kauai.......  Kuhio Highway, Short Term Improvements, Kuamoo Road to Temporary     RTA October 2009........       $17,000,000  $34 million total CON, $17 million
                                            Bypass Road.                                                                                                     ARRA funds.
      S7 STATE               Maui........  Piilani Highway Pavement Preservation, Lipoa Street to Kilohana,     NTP 8/31/09.............        $2,979,480
                                            Maui.
      S8 STATE               Maui........  Hana Highway PPM, Kaupakalua Road to Huelo, Maui...................  NTP 8/26/09.............          $619,301
      S9 STATE               Molokai.....  Maunaloa Highway Resurfacing, MP 5--Airport, Molokai...............  NTP 8/26/09.............        $2,688,406
     S10 STATE               Molokai.....  Kalae Highway PPM, Maunaloa Highway to Kalaupapa Lookout, Molokai..  NTP 8/26/09.............         1,061,781
     SR3 STATE               Molokai.....  Farrington Hwy Resurfacing, Kalae Hwy to Puupeelua Ave, and          RTA August 2009.........        $6,000,000
                                            Puupeelua Hwy Resurfacing, Farrington Ave to Moanaloa Hwy (Route
                                            480 PPM), Molokai.
     SR4 STATE               Maui........  Kaahumanu Avenue, Waiale Bridge Girder Replacement, Maui...........  RTA September 2009......        $2,750,000  Project ready--Amending 1511 CERT.
     SR1 STATE               Oahu........  H-1 Dowel Retrofit, Kaimuki and Palailai Areas, Oahu...............  RTA September 2009......       $11,000,000
                                                                                                                                         -------------------
               Subtotal      ............  ...................................................................  ........................       $66,330,876  ..................................
                                                                                                                                         ===================
      C1 C&C HON             Oahu........  Traffic Signals at Various Locations, Phase 10.....................  RTA September 2009......        $3,407,221  Obligated 6/18/09.
      C2 C&C HON             Oahu........  Traffic Imp. at Various Locations, Harding Ave. and 5th & 11th Aves  RTA September 2009......        $2,800,000  Obligated 8/18/09.
      C3 C&C HON             Oahu........  Waipio Point Access Road Improvements..............................  RTA October 2009........        $5,000,000  ..................................
      C4 C&C HON             Oahu........  Traffic Management Center Auxiliary Power Facility.................  RTA September 2009......          $400,000  ..................................
      C5 C&C HON             Oahu........  Kalaeloa Blvd Widening and Reconstruction, Phase 1 OR&L ROW to       RTA September 2009......        $7,000,000  ..................................
                                            Lauwiliwili Street.
      C6 COUNTY              Hawaii......  Ane Keohokalaoloe Highway, Hawaii..................................  RTA October 2009........       $35,000,000  ..................................
      C8 COUNTY              Kauai.......  Lydgate Park to Kapaa Bike/Ped Path (phase III)....................  RTA September 2009......        $4,120,000  RTA rescheduled from July 2009 due
                                                                                                                                                             to Sierra Club complaint to FHWA.
      C9 COUNTY              Maui........  Market Street Improvements, Phase 2................................  Bid Open 9/16/09........        $5,287,166  ..................................
                                                                                                                                         -------------------
               Subtotal      ............  ...................................................................  ........................       $63,014,387  ..................................
                                                                                                                                         ===================
               TOTAL         ............  ...................................................................  ........................      $129,345,263  $125,746,380
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


    Chairman Inouye. I have a confession to make--I'm allergic 
to pollen, and Hawaii is filled with pollen.
    So, if you want to give me a label, get it.
    So, you're satisfied with the coordination, fine with all 
of the county governments--these projects are jointly planned?
    Mr. Morioka. Yes, because the State department of 
transportation is the--considered the oversight agency, we 
don't have to oversee the county projects, as well, and so we 
have tried to assist them with our own staff, in order to make 
sure that they will meet the deadlines, as well.
    Chairman Inouye. Well, I thank you very much, Mr. Director. 
You've been very helpful and let's have more so that we can do 
some ribbon-cutting.
    Mr. Morioka. Absolutely.
    Chairman Inouye. And now our next witness is the Division 
Administrator of the Federal Highway Administration, Mr. 
Abraham Wong.

STATEMENT OF ABRAHAM Y. WONG, DIVISION ADMINISTRATOR, 
            FEDERAL HIGHWAY ADMINISTRATION, U.S. 
            DEPARTMENT OF TRANSPORTATION
    Mr. Wong. Thank you.
    Mr. Chairman, thank you for this opportunity to discuss the 
impact on Hawaii's economy of highway infrastructure funding on 
the Recovery Act.
    The FHWA Division Office has been working closely with the 
Hawaii Department of Transportation to ensure that Recovery Act 
requirements are met, investments are appropriate, and highway 
projects are implemented efficiently to put people to work in 
good jobs.
    My office's partnership with HDOT to administer Recovery 
Act started even before the act was passed, as we began 
coordinating to identify appropriate projects. On March 3, 
2009, President Obama, and Vice President Biden joined 
Secretary LaHood at the DOT, to announce the availability to 
States of nearly $26.7 billion for highway investment, 
including $125.7 million for Hawaii.
    The Hawaii Division Office has authorized 11 projects in 
Hawaii for a total of more than $51 million, and HDOT has 
already awarded contracts against 9 projects, totaling $43 
million in Recovery Act obligations.
    To date, HDOT has issued notices to proceed for five of 
these projects, allowing contractors to begin construction. In 
addition to providing jobs, these projects will extend the life 
of Hawaii's pavements and bridges.
    We are working diligently to ensure that the funds for 
projects in Hawaii are quickly distributed, however, we must 
also get the funds out in the right way, and FHWA continues to 
focus on reporting and risk management.
    To guide our oversight, we are employing risk management 
strategies, including resource enhancement, communication and 
education efforts, and Division Office and National Review Team 
oversight. For example, in the Hawaii Division Office, we have 
added one full-time engineer, a part-time financial specialist 
to help ensure projects are delivered as quickly as possible, 
with full attention to requirements and stewardship.
    In partnership with HDOT, we have established procedures to 
meet Recovery Act reporting requirements, and we have met those 
requirements.
    Hawaii division offices have also provided training through 
a number of venues to various groups, including Hawaii Council 
of Mayors, industry groups, and State and county staffs. 
Additionally, we have provided information through the State 
website, and our local Transportation Assistance Program Center 
at the University of Hawaii.
    As another risk mitigation strategy, FHWA has required each 
division office to develop its own Recovery Act risk management 
strategy, which includes spot checks of projects to ensure 
proper procedures are followed. In Hawaii, the division office 
has assisted the State and local partners, delivering some of 
the most challenging and complex project in Hawaii's Recovery 
Act program, mainly the Kuhio Highway Project on Kauai, and 
Mid-Level Road Project on the Big Island.
    My office has also carried out 20 project reviews, and in 
some cases recommended procedural changes to improve the 
quality or efficiency of meeting a requirement.
    FHWA has also established 3 national review teams to carry 
out more in-depth reviews in our identified risk areas across 
all 50 States. One of these review teams will visit Hawaii in 
October.
    As we move forward with Recovery Act implementation, we 
will continue to employ these risk mitigation strategies. At 
FHWA, we are mindful of the importance of ensuring the 
successful investment of highway dollars under the Recovery 
Act. When all of Hawaii's Recovery Act highway funds are 
expended, we estimate that this investment will create and 
retain over 1,350 full-time job years.
    In addition to near-term employment, these highway 
infrastructure investments will return economic benefits to 
Hawaii for many years to come.
    In the Hawaii Division Office, we are doing our part to 
work with HDOT to ensure that Hawaii's remaining Recovery Act 
funds are invested as quickly as possible--as quickly, and 
effectively, as possible.
    Mr. Chairman, this concludes my remarks, I would be happy 
to answer your questions.
    [The statement follows:]

                 Prepared Statement of Abraham Y. Wong

    Chairman Inouye, Ranking Member Cochran, and Members of the 
Committee, thank you for the invitation to appear before you today to 
discuss the impact on Hawaii's economy of funding for highway 
infrastructure under the American Recovery and Reinvestment Act of 2009 
(Recovery Act). The Federal Highway Administration (FHWA) Hawaii 
Division Office has been working very closely with the Hawaii 
Department of Transportation (HDOT) to ensure that Recovery Act 
requirements are met, investments are appropriate, and Recovery Act 
highway projects are implemented efficiently to put more people to work 
in good jobs.
    Signed into law by President Obama on February 17, 2009, the 
Recovery Act is an unprecedented effort to jumpstart our economy, 
create or save millions of jobs, and put a down payment on addressing 
long neglected infrastructure challenges so our country can thrive in 
the 21st century. The Recovery Act is a lifeline for Americans who work 
in construction and have been especially hard hit by the recession. 
Overall, the Administration estimates that the highway portion alone of 
the Recovery Act will eventually create or sustain close to 300,000 
jobs by 2012.
    Today, I want to share with you FHWA's current and planned 
activities for effectively administering the Recovery Act in Hawaii and 
throughout the country.

                                OVERVIEW

    Even before the Recovery Act became law, the Department of 
Transportation (DOT) developed an implementation strategy to ensure 
that the Department would be prepared to carry out its elements of the 
legislation as quickly and effectively as possible. Staff from FHWA 
joined an intermodal team of experts from a variety of disciplines 
(policy, legal, financial, and information technology), assembled by 
DOT Secretary Ray LaHood, to anticipate the requirements in the pending 
legislation. This team--called the Transportation Investment Generating 
Economic Recovery, or TIGER, Team--was tasked with coordinating and 
overseeing the Department's responsibilities. The outstanding work of 
the TIGER Team continues to be instrumental in keeping DOT's Recovery 
Act implementation on track.
    Likewise, FHWA's partnership with HDOT to administer the Recovery 
Act started before the Act was passed. Anticipating passage of the 
bill, the FHWA Hawaii Division Office worked with HDOT and coordinated 
with local agencies to identify projects that would strike the best 
balance between funding, needs, and expediency. The Hawaii Division 
Office used regularly scheduled meetings, video conferences, and 
various program planning scenarios to consider the most effective and 
efficient way forward for Hawaii.
    On March 3, 2009, President Obama and Vice President Biden joined 
Secretary LaHood at DOT to announce the availability to the States of 
nearly $26.7 billion for highway investment, including $125.7 million 
for Hawaii. Within hours of the President's announcement, States began 
approving projects--in full compliance with all Federal laws and 
regulations. FHWA reached a significant milestone 3 weeks ago with the 
approval of the 6,000th highway project funded by the Recovery Act. As 
of August 14, FHWA Division Offices have authorized 6,626 projects in 
all States and territories for a total of $17.52 billion. This 
represents 66 percent of total funds available. We are working 
diligently to ensure that the funds for these projects in Hawaii and 
nationwide continue to be distributed quickly, wisely, and with 
unprecedented transparency and accountability.
    Currently, we have 3,248 Recovery Act highway construction projects 
actually underway nationwide. As each project is approved and 
construction begins, we are seeing a reenergized spirit of 
communication and partnership among FHWA, States, Metropolitan Planning 
Organizations, local governments, and the transportation industry. FHWA 
is also hearing good news from States that many projects are running 
under budget. In Hawaii, bids on early projects have come in well below 
the engineers' estimates--in some cases, as much as 50 to 60 percent. 
The savings are now being programmed for additional needed work and 
will be creating even more jobs.
    The Hawaii Division Office has authorized 11 projects in Hawaii for 
a total of more than $51 million, and HDOT has awarded contracts 
against 9 projects, totaling $43 million in Recovery Act obligations. 
To date, HDOT has issued notices to proceed for five of these projects, 
allowing contractors to begin construction. HDOT anticipates issuing 
notices to proceed for several more projects in the next few weeks.
    We estimate that these five projects alone will provide around 200 
full time jobs. In addition, these projects include a number of 
important resurfacing, preservation, and replacement efforts that will 
cost-effectively extend the serviceability of the State's pavement and 
bridges.
    For example, construction will begin soon on the South Punaluu 
Stream Bridge replacement project on Kamehameha Highway in Hauula. 
Approximately $20.3 million in Recovery Act funds will be used for this 
project to help ensure continued safe operation of this vital link to 
Oahu's North Shore.
    Construction is also well underway for seismic retrofit of two 
critical overpass bridges on the H-1 freeway in the Kapolei area. This 
$865,000 Recovery Act project will use fiber reinforced polymer wrap 
technology to ensure seismic safety for these key bridges.
    A clean and paint project will begin in September in the Paauila 
area on Hawaii Belt Road. This $8.2 million Recovery Act investment 
will protect and preserve four historic steel trestle bridges by 
removing the existing lead-based paint and repainting the bridges with 
a zinc-rich moisture cure polyurethane paint system.
    These are just a few examples of how, in Hawaii, Recovery Act 
dollars are providing needed investments for our people and in our 
infrastructure. This is happening throughout the country. Every new 
project obligated is a signal for States to advertise contracts, and 
for contractors to begin hiring workers and ordering materials such as 
steel, asphalt, and concrete. Recovery Act projects will save lives, 
while strengthening the economy by helping our highway system move 
people and goods more efficiently and effectively.

                     ECONOMICALLY DISTRESSED AREAS

    The Recovery Act requires States to give priority to projects 
located in Economically Distressed Areas (EDAs), and FHWA has oversight 
responsibility to ensure that the States fulfill this requirement. An 
EDA may be determined using one of three criteria. Under the first two 
criteria, an area is economically distressed if it has a per capita 
income of 80 percent or less of the national average or if it has an 
unemployment rate that is, for the most recent 24-month period for 
which data are available, at least 1 percent greater than the national 
average unemployment rate. In order to assist the States in evaluating 
these criteria, FHWA has provided a diagnostic self-assessment tool 
that utilizes geographic information system mapping technology to 
identify EDAs based on per capita income and unemployment rates at the 
county level. Using this tool, the Big Island of Hawaii and the island 
of Molokai have been identified as EDAs.
    FHWA is close to issuing additional guidance about the third 
criterion--special need. Hawaii has not yet identified any EDAs using 
the special need criterion. However, FHWA will work with the State 
should Hawaii identify any areas that might meet the special need 
criterion.
    FHWA Division Administrators continue to work closely with their 
State counterparts to assess which areas within each State meet the 
definition of EDA. The Divisions and States reviewed the number of 
projects and share of Recovery Act dollars slated to be spent in these 
areas. Currently, of the funds already obligated in Hawaii, 27 percent 
are directed toward EDAs for three projects totaling over $14 million. 
Our Hawaii Division Office will continue to work with the State to 
ensure that the State is giving priority to EDAs in the selection of 
projects.

           TRANSPARENCY, ACCOUNTABILITY, AND RISK MANAGEMENT

    With two-thirds of the total FHWA-administered Recovery Act funds 
obligated, the Agency continues to focus on reporting and management of 
the risks associated with such a large investment of dollars in 
transportation. It is not only important to get the money out quickly--
we must get it out in the right way. The public needs to know what 
their money is buying, and FHWA has moved forward aggressively to 
fulfill the President's commitment to transparency and accountability 
for Recovery Act funds. FHWA's Recovery Act progress is on the front 
page of our website, updated every day, and we are providing detailed 
reports through Recovery.gov.
    Even before the Recovery Act was enacted, the Agency realized that 
delivery of Recovery Act projects would not be business as usual. While 
FHWA was fortunate in having established programs, procedures, and 
partners for handling the Recovery Act funds, the Agency recognized 
that there were additional risks associated with the sudden increase in 
funds coupled with the tight timelines the Act imposed for getting 
funds in the hands of recipients. Accordingly, we developed a risk 
analysis and risk mitigation plan associated with the Recovery Act 
funding. With assistance from the Office of Management and Budget, the 
Office of Inspector General, and the Government Accountability Office, 
FHWA studied the risks associated with the Recovery Act and began 
taking precautions. We finalized a National Risk Management Plan in 
April to guide our oversight of these funds and to ensure that they are 
spent appropriately.
    Many of the risks we identified are associated with the contract 
and construction phase of a project. There are inherent risks in 
rushing to push projects out the door. Credible estimates of cost and 
schedule and timely adjustment of obligated amounts are important. Bid, 
contract negotiation, and change order procedures must remain within 
Federal guidelines. Additionally, we must ensure that Recovery Act 
funds are used for their intended purposes. Local agency oversight due 
to lack of experience by local public agencies in handling Federal-aid 
projects is another risk area FHWA identified and is addressing.
    FHWA is implementing eight risk mitigation strategies: Resource 
Enhancement; Communication and Education; Sharing Risk with Partners; 
Division Office Oversight; National Oversight; Measure, Monitor, and 
Review; Information and Tool Development; and Reassessment and 
Feedback. These strategies are cross-cutting and respond to the 
identified risks by enhancing staff capabilities, providing guidance 
and information, and ensuring oversight. We are actively employing 
these strategies at the local, State, and National levels.
    For example, FHWA has provided additional staff at the Division 
Office level to ensure projects are delivered as quickly as possible 
with full attention to requirements and stewardship. In the Hawaii 
Division Office, we have added one full time engineer and a part time 
financial specialist. In partnership with HDOT, we have established 
procedures to meet Recovery Act reporting requirements, and we have met 
the requirements.
    FHWA's communication and education efforts are extensive. The FHWA 
Headquarters Office has held a set series of weekly, then bi-monthly, 
and now monthly video conferences with Division Office staff, coupled 
with a website that includes a series of questions and answers as 
guidance to field staff. Within 2 weeks of the Act's passage, FHWA 
issued detailed guidance explaining how the funds were to be 
administered. The FHWA Headquarters Office has also held a series of 
teleconferences, and web and video conferences with stakeholders, 
including State DOT Chief Executive Officers (CEOs), local agency 
Directors of Public Works, County Engineers, and tribal leaders and 
their transportation personnel. The Agency has supplemented these 
national efforts through numerous training sessions sponsored, in part, 
by FHWA Division Offices. Our primary purpose in these sessions is to 
help State and local officials understand Recovery Act requirements and 
find ways to streamline the processes, while still meeting legal 
requirements. The Hawaii Division Office has provided training through 
a number of venues to various groups, including the Hawaii Council of 
Mayors, industry groups, and State and county staffs. We have also 
provided information through the Hawaii State website and our Local 
Transportation Assistance Program Center at the University of Hawaii.
    As another risk mitigation strategy, FHWA has required each 
Division Office to develop its own Recovery Act risk management 
strategy, which includes an active program of highly visible, frequent 
``spot checks'' on five of the key national risks. Often conducted on 
construction sites, the purpose of these spot checks is to ensure 
proper procedures are followed. Nationwide, FHWA has carried out over 
2,000 of these spot checks. In Hawaii, the Division Office has been 
actively involved in assisting the State and local partners delivering 
the most challenging and complex projects in Hawaii's Recovery Act 
program, namely the Kuhio Highway project on Kauai and the Ane 
Keohokalaoloe Highway project on the Big Island. The Hawaii Division 
Office has also carried out 20 project reviews and, in some cases, 
recommended procedural changes to improve the quality or efficiency of 
meeting a requirement.
    While FHWA is depending on its Division Offices to carry out these 
spot checks on the front lines of the agency's risk management, FHWA 
has also established three National Review Teams to carry out more in-
depth reviews in our identified risk areas across all 50 States. By the 
end of the year, FHWA expects these teams to have visited all 50 
States, carried out more than 90 reviews, and inspected nearly 400 
projects, which will lead to reduced risks and increased 
accountability. One of these teams will visit Hawaii in early October. 
When the review teams find similar issues in several States, FHWA sends 
an advisory to its Directors of Field Service for discussion with field 
offices. The results of these national reviews are summarized every 2 
weeks and reported at the highest levels in the Agency.
    The Agency is also monitoring progress and risks by analyzing data 
received from States, coupled with information obtained from the 
National Review Teams, to identify trends or problem areas and make 
swift real-time corrections as needed.
    We are also reviewing projects both prior to and after 
authorization to ensure projects are moving forward and meeting all 
applicable requirements. Many of the project reviews thus far have 
focused on environmental clearances and design requirements needed for 
individual projects. In the Hawaii Division Office, for instance, on 
Mid-Level Road on the Big Island, we are working very closely with the 
State and County to deliver this complex $35 million project under the 
Recovery Act. Likewise, we have assigned an experienced engineer to 
work with the State on the Kuhio Highway project on Kauai.
    As we move forward with Recovery Act implementation, we will 
continue to employ these risk mitigation strategies to fulfill our 
mandate that these funds are prudently spent.

               CERTIFICATIONS AND REPORTING REQUIREMENTS

    The Recovery Act includes a number of certification and reporting 
requirements that apply to highway infrastructure investments. These 
include section 1201 maintenance of effort (MOE) certification and 
reporting, section 1511 certification, section 1512 reporting, and 
section 1609 reporting requirements. FHWA has worked proactively in 
each of these areas to ensure that States have the guidance they need 
to comply with the requirements, and that we process these submissions 
efficiently.
    Implementation of the section 1201 MOE provision has presented some 
challenges. The provision establishes a process through which States 
verify that Recovery Act funds supplement, not supplant, planned State 
expenditures. While all States and territories met the statutory filing 
deadline of March 18 for their certification of planned State 
expenditures, the Agency's review of the MOE certifications revealed 
substantial variations in how States calculated their certified 
amounts. As a result, FHWA worked with other DOT modal administrations 
and the Office of the Secretary to provide additional guidance and 
technical assistance to States so that they could file amended MOE 
certifications if appropriate. As an additional oversight step, FHWA 
Division Administrators have met with their respective States to review 
the calculation methodology used by the State for the highway 
infrastructure portion of the MOE certification. In those meetings, 
they also discussed how the State prepared the first MOE reports of 
actual State expenditures. These steps are to ensure that there is a 
``level playing field'' when it is time to measure MOE performance and 
determine which States may participate in the August 2011 
redistribution of obligation authority.
    Section 1511 of the Recovery Act requires submittal to the 
Secretary of a certification by the Governor, mayor, or other State or 
local government CEO, stating that the infrastructure investment has 
received the full vetting and review required by law, and accepting 
responsibility that the investment is an appropriate use of taxpayer 
dollars. The certification also must include certain specific 
information on the investment, including the project description, 
estimated total cost, and amount of Recovery Act funds to be used. The 
1511 certification must be posted online before Recovery Act funding 
may be obligated to the project. FHWA has been successful in rapidly 
reviewing for sufficiency and posting online the 1511 certifications so 
that highway infrastructure projects can move forward quickly. Hawaii's 
1511 certifications submitted to the Secretary on March 16 and July 21 
included a total of 19 projects fully vetted and reviewed as required 
by law. The projects identified in the 1511 certification included both 
projects that could be shovel ready in a short period of time and 
larger projects that were significant new additions to the 
transportation system. The projects were also selected to meet all the 
sub-allocation requirements contained in the Recovery Act. FHWA 
continues to work closely with HDOT to monitor these projects and help 
ensure their successful delivery.
    As part of the transparency requirements of the Recovery Act, both 
section 1201 and section 1512 call for recipients to submit information 
on funded projects, including progress on the project and economic 
effects such as job creation. Even before final passage of the Recovery 
Act, FHWA moved forward with the development of an electronic system to 
facilitate compliance with the expected reporting requirements. To the 
extent possible, the FHWA system uses existing data sources to fulfill 
Recovery Act data needs, which helps to streamline the reporting 
process. The Agency held a number of outreach sessions for its partners 
to assist them in using the reporting system. In addition, FHWA has 
assisted its recipients in data quality assurance efforts. All of these 
actions enabled FHWA to begin providing Recovery Act data not long 
after implementation.
    To ensure that projects meet the goals of both the National 
Environmental Policy Act (NEPA) and the Recovery Act, section 1609 
requires that the President periodically report on the NEPA status and 
progress of Recovery Act-funded projects and activities. This is a 
significant undertaking for highway infrastructure projects because of 
the number of projects. FHWA is working closely with its State partners 
and the President's Council on Environmental Quality, which is 
overseeing section 1609 reporting, to fulfill this requirement. FHWA's 
first section 1609 report on April 9 provided information on over 3,000 
projects, with approximately 2,500 Federal environmental approvals 
completed. The second report dated April 30 addressed over 4,000 
projects, with approvals completed on more than 3,000 projects. In the 
report to Congress on August 3, FHWA reported over 5,000 projects, with 
approvals completed on more than 4,500 projects. For Hawaii, this 
included eight projects with all Federal environmental approvals 
completed on four projects. This reporting demonstrates the cooperative 
partnership FHWA has with State DOTs as well as with our Federal 
partners.

                               CONCLUSION

    At FHWA, we are mindful of the importance of ensuring the 
successful investment of highway dollars under the Recovery Act. When 
all of Hawaii's Recovery Act highway funds are expended, we estimate 
that this investment will create or retain over 1,350 full time job-
years. In addition to the near-term employment impacts, these highway 
infrastructure investments will return economic benefits to Hawaii for 
many years to come. In the Hawaii Division Office, we are doing our 
part to work with HDOT to ensure that the State's remaining Recovery 
Act funds are invested as quickly and effectively as possible.
    Mr. Chairman, thank you for the opportunity to appear before you 
today. I would be happy to answer your questions.

    Chairman Inouye. I thank you very much, Mr. Wong.
    Are you satisfied with the relationship that you have 
established with HDOT?
    Mr. Wong. Yes, very much so. I think we looked at this as a 
great opportunity. One of the things we recognized at the 
outset, I guess, was that this was not going to be business-as-
usual, and we'd have to look at ways of overcoming certain 
challenges and working together more closely. I think, to date, 
that's fulfilled that expectation, and we look forward to----
    Chairman Inouye. Do you agree with Director Morioka's 
response that his department will meet all deadlines and 
milestones?
    Mr. Wong. We're on schedule, as it is. You know, we took a 
great deal of time and effort, I think, in the beginning to 
kind of set out a plan--identifying the projects, looking at 
the timeframes, and kind of matching that up with the resources 
and people that we had to work with.
    And putting together that plan, we are, at this point, on 
schedule with all of the components of the plan, so I don't 
think we're going to----
    Chairman Inouye. How many States do you think are on 
schedule?
    Mr. Wong. I think it's tough for me to say. I mean, we see 
some numbers--we're kind of right at the bottom or middle of 
the pack, some are ahead of us, some are behind us, so you 
know, we're----
    Chairman Inouye. But we're doing okay?
    Mr. Wong. We're doing okay.
    Chairman Inouye. So, you're satisfied with the coordination 
that you are finding?
    Mr. Wong. I think--I think, yeah. This challenge has really 
brought us together in a way, you know, we haven't communicated 
and coordinated, you know, in the past, and this has really 
been, you know, effective.
    Chairman Inouye. When will the full amount of the contract 
have been obligated?
    Mr. Wong. When will the----
    Chairman Inouye. You obligate the funds that you receive?
    Mr. Wong. Yes, we've obligated about 42 percent of those 
funds at this point.
    Chairman Inouye. When will the rest be?
    Mr. Wong. We're required to have 100 percent obligated by 
March 3, 2010. As Director Morioka stated, our goal is to have 
them obligated by the end of October.
    Chairman Inouye. So, you're satisfied you'll meet the 
deadline?
    Mr. Wong. I think we'll be close. We may be a little bit 
over, but I think within this year.
    Chairman Inouye. Congratulations, sir.
    Mr. Wong. Thank you.
    Chairman Inouye. We thank you very much.
    Mr. Wong. Thank you.
    Chairman Inouye. Now, I'm pleased to call upon Dr. David 
Lassner, the vice president for information technology and 
chief information officer at the University of Hawaii.
    Dr. Lassner.

STATEMENT OF DR. DAVID LASSNER, VICE PRESIDENT FOR 
            INFORMATION TECHNOLOGY AND CHIEF 
            INFORMATION OFFICER, UNIVERSITY OF HAWAII
    Dr. Lassner. Good morning, thank you for this opportunity 
to discuss broadband with you. Although my day job is at the 
University of Hawaii, really I'm here to talk with you a little 
bit about Hawaii's progress on broadband, which was one of the 
major components of the ARRA.
    I had the pleasure of chairing Hawaii's Broadband Task 
Force, which was established by the legislature in 2007, and 
pulled together a group of representatives from both the public 
and private sector, including six legislators, members of your 
staff, as well.
    We worked for about 2 years to start charting Hawaii's 
broadband future, and this really, I think, positioned us well 
when the stimulus act came along, and also the election of a 
President who--as I learned on Maui--you would characterize as 
addicted to his BlackBerry, who really gets it about what this 
technology is all about.
    Hawaii's Broadband Task Force really, I think, came to 
recognize a couple of things. One is that this is--and it's a 
pleasure to be here with transportation guys--that arguably 
broadband is the equivalent for this century of the Federal 
highway systems in the last century--that this is our 
infrastructure for the new economy, new forms of healthcare, 
new forms of education, new forms of Government services. And 
what the task force also learned is we've had a devastating 
loss of national leadership as a country--not so much in 
Hawaii, but as a country--and the United States has really 
dropped in every kind of ranking one can imagine relating to 
broadband over the last decade or so.
    So, the Hawaii Broadband Task Force really looked for ways 
that Hawaii could achieve competitiveness internationally, 
rather than just nationally.
    So, along came the stimulus bill, the ARRA, and its focus 
on broadband. And it really looked at three different kinds of 
programs.
    The first is the implementation of, in fact, your Broadband 
Data Improvement Act of 2008. Funding was provided through the 
ARRA to all 50 States to implement that act, which is a great 
step forward.
    The second was a charge to the Federal Communications 
Commission (FCC) to develop a national broadband strategy, 
something we haven't had in this country--well, ever, since 
we've really started recognizing broadband as our 
infrastructure for the next century.
    And third is a set of competitive programs to allocate 
about $7.2 billion in funds, to implement broadband 
infrastructure and programs of adoption and supportive 
applications and uses.
    So, this is where the strategic goals of advancing the 
Nation really conflict with the ARRA's goals of getting money 
out fast for economic recovery. In a normal world, one would 
like to collect the data, use the data to prepare a strategy, 
and then based on that strategy, allocate funds for 
infrastructure projects and services.
    Instead, we had deadlines to put in proposals for 
infrastructure and services last week, we have no data, and we 
have no strategies, so everyone's sort of struggling along as 
best we can, grateful for the $7.2 billion of opportunity, but 
probably the Nation won't do the best we could if we had the 
luxury of staging these things a little bit more thoughtfully.
    I've been involved with a number of the proposals, and let 
me say a little bit about what's gone in Hawaii. A number of 
the proposals have been about connecting what we call our 
``anchor institutions,'' and the ARRA has very properly, I 
think, put an emphasis--as one of the statutory purposes of the 
broadband provisions--on connecting our Nation's schools, 
libraries, healthcare facilities, colleges and universities, as 
really the anchors of our communities that will help drive 
demand, drive the new kinds of applications that we're seeing 
in other countries that have leap-frogged the United States, as 
well as anchored the construction of new broadband 
infrastructure that will then be extended out to serve our 
communities throughout the Nation. This has been a bit of a 
challenge, because the--while the law is very clear about the 
importance of this, the implementation of the law through the 
Federal agencies has been a little bit less supportive.
    So, let me see something about the proposals that have--
that I know of that have come out of the State of Hawaii--and 
then a little bit about how, perhaps, some of the work by the 
Federal agencies could be a little more supportive of our 
efforts, here.
    It's important to note, I think, that the broadband 
stimulus funds are completely awarded on a competitive basis. 
So, there are no formulas, there's no set allocations. In the 
case of the broadband mapping, the expectation is that there 
will be one proposal per State and territory, and the Governor 
does designate who that designated entity would be. In our 
case, it's the State department of commerce and consumer 
affairs, and that proposal went in, as the Governor mentioned, 
on time, on schedule, under budget, last week. And I think 
you'll be pleased to know that while some States have sort of 
outsourced this mapping initiative, we're actually leveraging 
the expertise of the Pacific Disaster Center on Maui, and their 
geospatial experience to apply that in the broadband arena, and 
we have asked for some expertise on broadband data sources, and 
broadband-specific mapping. We'll also be working with a couple 
of local contractors to help us with some of the IT and project 
management.
    We have a major proposal in that's a collaboration among 
the University of Hawaii system, the Hawaii Department of 
Education, and the Hawaii State Library System. It's ambitious, 
we intend to--if funded--pull fiber optic connectivity to every 
public library, every public school, every higher education 
facility, anywhere in the State, on all islands, and activate 
this with at least connectivity of a billion bits per second 
rate--a gigabyte per second--far beyond the definition of 
broadband in the act, but we think appropriate for our schools 
and libraries in the next century.
    We've also submitted a proposal working with the libraries 
and the Hawaii Community College System for public computer 
centers--another aspect of the ARRA. We hope to get about 650, 
or so, computers out into 70 plus locations around the State to 
provide access for those who are traditionally underserved.
    Very large public safety proposal went in, partnership 
among, particularly, the neighbor island counties to improve 
the ability of first responders to serve their communities. We 
know that at least one of our commercial telecom companies put 
in a proposal to beef up their infrastructure on the Big 
Island, and earlier today the university submitted a proposal 
to the National Science Foundation which decided to set aside 
some of its ARRA funding for academic research infrastructure 
that--in a manner that was supportive of both construction of 
traditional laboratories, as well as upgrading of networks--
that, again, are lifeblood of research and innovation during 
this century. So, that would improve Hawaii's connectivity to 
the mainland, something that we've really struggled with for a 
decade or more.
    What I want to emphasize is that while these proposals 
total more than $200 million, they are all under review, or 
will be under review, within the Federal agencies. We have no 
idea how many of them will be funded--if any--and we have no 
idea whether anyone else submitted proposals. Actually, we're 
quite sure that many other entities have submitted proposals, 
but the nature of the broadband funding was that anyone could 
submit a proposal from anywhere, without any oversight or 
guidance.
    So, let me say a little bit about the--some suggestions on 
how this might be more clear. The Department of Agriculture and 
Department of Commerce worked together to put out one 
application form for the broadband infrastructure funds. This 
turned out to be a good idea in principle that was fairly 
problematic. Their computer system crashed seriously the day 
before the proposals were due, giving an indication of the 
interest. They had to extend their deadlines by a week in order 
to accommodate the fact that people could not apply on time.
    They have used a very unambitious definition of broadband 
that is absolutely not suitable for the 21st century, we're 
hopeful they'll set a more aggressive agenda, much as we have 
within the State of Hawaii.
    They've asked for data, down to the census-track level, 
that's largely unavailable to the entities that might want to 
submit a proposal, particularly those of us involved in 
networking schools and libraries and higher education sites.
    There was a large requirement for matching funds, coupled 
with an extremely strict interpretation of what could be used 
as a match, and far beyond what we're accustomed to in previous 
programs, including out of the Department of Commerce, and some 
of the innovative telecom programs that they ran out of that 
Department in the nineties.
    They have a very difficult process for reviewers that will 
discourage, I think, competent reviewers from looking at these 
proposals and rating them. In particular, anybody who asks to 
review is precluded from every submitting another proposal 
again, on behalf of their employing, or agency, so anybody at 
the university who wanted to review would not be able to submit 
a proposal at any time in the future. And they 
compartmentalized the proposals within the system.
    I have attached, and I want to refer to some very 
thoughtful input provided by the Schools, Health and Libraries 
Broadband Coalition. This is a national group that's really 
looked at how future rounds of this program could be improved.
    The good news is that there are very thoughtful 
conversations at the national level, and within Hawaii. We are 
only through round one of this program--they have announced 
that there will be rounds two and three, so there is a great 
opportunity to improve these programs, and they've indicated 
their willingness to do so. I think all of us in Hawaii who are 
not very convinced that our applications will make it through 
the process have a good attitude that we can resubmit in rounds 
two if we are not successful this time around, and we do 
appreciate that these departments have had a very difficult 
task of trying to advance our Nation's broadband capability, 
while getting dollars on the street and shovels in the ground 
as quickly as possible.
    I'd be glad to answer any questions you may have, thank 
you.
    [The statement follows:]

                  Prepared Statement of David Lassner
    Thank you for this opportunity to share some local perspectives on 
the impact of the ARRA as it relates to broadband in Hawaii.

                      HAWAII BROADBAND TASK FORCE

    From 2007 through June 2009 I had the pleasure of serving on the 
Hawaii Broadband Task Force. The Task Force was established by the 2007 
Hawaii State Legislature with a mix of public and private sector 
members appointed by the Speaker of the House and Senate President to 
provide recommendations on how to advance broadband within the State of 
Hawaii. I was honored to be elected as chair by my fellow task force 
members.
    When the task force completed our recommendations for the 
Legislature at the end of 2008, we greeted with great enthusiasm the 
words of then President-Elect Obama on December 6, 2008: ``It is 
unacceptable that the United States ranks 15th in the world in 
broadband adoption. Here, in the country that invented the Internet, 
every child should have the chance to get online, and they'll get that 
chance when I'm President--because that's how we'll strengthen 
America's competitiveness in the world.''
    While there wasn't enough time or money to do everything we had 
hoped, the Hawaii Broadband Task Force unanimously put forward four key 
recommendations, summarized as follows.
Broadband Is Vital to Hawaii
    Broadband is critical infrastructure for Hawaii's 21st century 
advancement in education, health, public safety, research and 
innovation, economic diversification and public services. One national 
study estimated the positive economic impact of advanced broadband in 
Hawaii at $578 million per year. The task force recommends that Hawaii 
establish an aggressive and forward-looking vision that positions the 
State for global competitiveness.
Driving Broadband Deployment
    The task force found that the United States as a whole is 
dramatically lagging the leaders in the developed world in our 
broadband capabilities and pricing, and is falling farther behind each 
year. While Hawaii is doing well on some measures relative to some 
other parts of the United States, the State also falls to the bottom in 
many national broadband studies. The task force recommends that the 
State consolidate all relevant regulatory and permitting 
responsibilities in a new, one-stop, broadband advancement authority 
that promotes Hawaii's policy objectives and provides advocacy at all 
levels of government.
Maximize Hawaii's Connectivity to the World
    Hawaii's ``lifeline'' for broadband to the rest of the world is 
expensive submarine fiber. While Hawaii was once the crossroads for 
trans-Pacific telecommunications, all of the new fiber systems built 
across the Pacific since 2001 have bypassed Hawaii. The task force 
recommends that Hawaii aggressively promote the landing of new trans-
Pacific submarine fiber in Hawaii, including a shared access cable 
station that reduces barriers to fiber landing in Hawaii.
Stimulate Broadband Adoption and Use
    The task force believes supplying advanced broadband at affordable 
prices is just one side of the equation. The task force recommends that 
Government lead by example in demonstrating the value of broadband to 
our citizenry, deploying broadband services to the public, and ensuring 
that we do not leave behind the economically disadvantaged members of 
our communities who may be inhibited from full participation in the 
21st century.
    There is much more detail and data in our full report, which is 
available at www.hbtf.org and was provided to each Hawaii Legislator 
and the Governor just before the end of the year.

      AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 AND BROADBAND

    It was with great excitement that members of the Hawaii Broadband 
Task Force greeted the emphasis on Broadband in the American Recovery 
and Reinvestment Act of 2009, or ARRA. While there are many components 
of the ARRA that are complementary to the sections on Broadband 
sections, such as Health IT, I'd like to focus my remarks this morning 
on Broadband and Hawaii. First, it is useful to summarize three key 
elements of the ARRA provisions regarding Broadband:
  --The ARRA provides funding for a grant program for State-based data 
        collection efforts to implement the Broadband Data Improvement 
        Act of 2008. If successful, this will provide better data than 
        we have ever had before about the actual state of broadband 
        across the Nation.
  --The ARRA charged the Federal Communications Commission to create 
        our Nation's first national broadband strategy, with an eye to 
        submitting a plan to Congress early next year.
  --The ARRA creates new grant and loan programs in the Department of 
        Commerce and Department of Agriculture to deploy broadband in 
        accord with a clearly defined set of statutory purposes and to 
        provide support for broadband adoption and usage. There will be 
        three rounds of application processes for these awards.
    In an orderly approach to these three objectives, we would first 
collect data, then use that data to craft a strategy, and then use the 
strategy to drive our investments in broadband infrastructure and 
services. But the current desperate need to stimulate the economy has 
driven a set of parallel initiatives in which ARRA proposals for the 
deployment of broadband infrastructure had to be submitted before we 
have data and before we have a national strategy. This is unfortunate, 
but it is also clear that the $7.2 billion provided for broadband 
infrastructure development through the ARRA is nowhere near enough to 
bring our Nation back to international competitiveness, much less 
leadership.

                 THE IMPORTANCE OF ANCHOR INSTITUTIONS

    As the lead technologist for the University of Hawaii System, which 
provides all public higher education in the State of Hawaii, I was 
delighted to see the emphasis in the ARRA on connecting anchor 
institutions such as schools, colleges, universities, libraries, and 
healthcare providers with broadband. Higher education and K-12 have a 
long history of working together with State Government in Hawaii to 
maximize the connectivity among our locations, among our organizations 
and to the Internet and Internet2 as appropriate.
    This spring I had the opportunity to work with a group of 
colleagues around the country as we tried to communicate to the new 
Administration the importance of institutions of higher education as 
broadband anchors in creating our Nation's future. I have attached our 
report on ``Unleashing Waves of Innovation: Transformative Broadband 
for America's Future'' to this written testimony.
    The Schools, Health and Libraries Broadband (SHLB) Coalition has 
also provided written remarks this morning that summarize the 
importance of connecting all our Nation's anchor institutions, and I 
have attached their comments to my written testimony as well. It is now 
well-understood that connecting these institutions can create jobs, 
increase capacity for providing broadband in more communities, improve 
the quality of a wide range of public and human services, increase our 
Nation's competitiveness, create future demand for more advanced 
broadband services, and provide a safety net for those who might 
otherwise be left behind.

                SOME BROADBAND-RELATED HAWAII PROPOSALS

    With the first round of competitive proposals closing only last 
Thursday, it is impossible to know at this time what was submitted in 
Round 1 from Hawaii.
    However, we do know that several major statewide proposals were 
submitted already, and many of us talked with one another as we were 
preparing our applications. I'd like to highlight a few ARRA 
applications from Hawaii that relate to broadband. This is by no means 
a complete list, but a sampling of some of the significant proposals. 
These proposals must all be competitively reviewed and selected before 
any funds are awarded.
    Mapping.--The State Department of Commerce and Consumer Affairs was 
designated to lead Hawaii's broadband mapping effort. Hawaii's proposed 
approach is to execute the work locally through an agreement with the 
University of Hawaii that will apply the geospatial talents within the 
Maui-based Pacific Disaster Center along with several other local 
resources. Specialized expertise on broadband data resources will 
complement our local capabilities in GIS, technology and project 
management.
    Education and Library Infrastructure.--The University of Hawaii, 
Department of Education and Hawaii State Public Library System 
collaborated to submit a broadband infrastructure proposal to the 
Broadband Technology Opportunities Program (BTOP) to implement and/or 
upgrade fiber optic capability to every public school, every public 
higher education facility and every public library on all islands and 
provision connectivity of at least one gigabit per second to every 
location. This proposal also incubates wireless in schools and 
libraries and deploys advanced interactive distance learning 
capabilities in higher education.
    Public Computing Centers.--The University of Hawaii and Hawaii 
State Public Library System submitted a Public Computing Center 
proposal to the BTOP program to provide public computers and training 
in every public library and in community college libraries and 
education centers on all islands.
    Public Safety.--A large collaborative proposal was submitted to the 
BTOP program to provide upgraded broadband communications capabilities 
for neighbor island counties' first responders.
    Provider Infrastructure.--At least one of our local commercial 
telecom companies submitted a BTOP proposal to improve its middle mile 
infrastructure on the Big Island.
    Academic Research Infrastructure.--The University of Hawaii 
submitted a proposal to the National Science Foundation's ARRA Academic 
Research Infrastructure program to address a previously unfunded 
recommendation in the America COMPETES Act to improve high-speed 
connectivity between Hawaii research and education community and 
national fiber optic research networks.
    Again, there were likely many more proposals submitted from public 
and private parties within Hawaii.

            SUGGESTIONS FOR IMPROVEMENT IN THE BTOP PROGRAM

    There have been many concerns expressed nationally and locally 
about problems with the first Round of the ARRA Broadband programs. The 
attached SHLB Coalition remarks provide one of the most comprehensive 
sets of recommendations for improvement in Rounds two and three. I'd 
like to provide a few observations and concerns from the teams I worked 
with over the past few months and that I heard from others in the 
community who attempted to leverage ARRA broadband funds for Hawaii.
    Although the ARRA is quite clear that connecting anchor 
institutions and improving public safety are primary purposes of the 
BTOP program, the Notice of Funding Availability (NOFA) was extremely 
unfriendly to such applications. The single-minded focus of the NOFA on 
residential services for the unserved and underserved, as uniquely 
defined in the NOFA, made submitting a proposal for other purposes seem 
like trying to insert a square peg into a round hole. All applications 
to connect anchor institutions were forced to pretend they were 
``middle mile'' proposals, a designation more appropriate for 
commercial providers than anchor institutions.
    Among the challenges were:
  --The extraordinarily unambitious definition of broadband that 
        perpetuates the last years of failed U.S. policy over the prior 
        8 years and is even more problematic for anchor institutions. 
        The Hawaii education and library application proposes direct 
        fiber optic connectivity to every public library with speeds 
        several thousand times faster than the NOFA's minimal 
        definition of broadband.
  --The use of census tract analyses to determine served and 
        underserved areas was incompatible with the public service 
        factors that drive the placement of anchor institutions in 
        communities.
  --The size of the matching funds required was exacerbated by the 
        ineligibility of many of the in-kind contributions that are 
        non-profit organizations are normally eligible to propose to 
        meet their matching requirements.
  --The quality of reviewers is extremely suspect given the unusual 
        decision to exclude as eligible anyone who might ever wish to 
        assist with a future proposal for their current or any future 
        employer. Similarly, the decision not to reimburse reviewers 
        for their expenses discourages participation by anyone outside 
        the beltway.
  --The decision to require separate applications for proposals to 
        implement broadband infrastructure, public computing centers 
        and/or sustainable broadband adoption programs created 
        significant additional work and interfered with the synergies 
        possible in developing integrated applications to deploy 
        infrastructure and use it to drive adoption.
    As the most direct way to address these problems, I strongly 
support the recommendation of the SHLB Coalition that a separate BTOP 
program be created in Rounds 2 and 3 that more directly and 
appropriately addresses the statutory priority on deploying broadband 
infrastructure to community anchor institutions.

                               CONCLUSION

    Over the past 2 years Hawaii has had substantial public dialog 
about the importance of broadband to our future and the need for an 
aggressive long-term vision that we can embrace as the basis of a new 
statewide strategy. The ARRA has focused similar attention nationally 
and stimulated new sets of conversations that are desperately needed if 
we are to reverse our backwards slide as a Nation.
    In the haste to roll out programs to stimulate the economy as 
quickly as possible, the Federal agencies entrusted with broadband 
stimulus funds appear to have had great difficulty crafting programs 
supportive of the kinds of transformative investments that Hawaii needs 
to achieve our own broadband goals. Hopefully, these problems will be 
addressed in future Rounds of stimulus funding, and more importantly, 
as the FCC crafts a national broadband strategy as required by the ARRA 
and we begin to implement it together at the national, State and 
community levels.
                                 ______
                                 

Unleashing Waves of Innovation--Transformative Broadband for America's 
                               Future \1\
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    \1\ Version 18: April 18, 2009. For the most current version of 
this essay, as well as related essays, visit http://www.cra.org/ccc/
initiatives.
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                           EXECUTIVE SUMMARY

    A forward-thinking National Broadband Strategy should focus on the 
transformative power of advanced networks to unleash new waves of 
innovation, jobs, economic growth, and national competitiveness. Such a 
strategy should create new tools to deliver healthcare, education, and 
a low carbon economy. The American Recovery and Reinvestment Act 
broadband decisions should target high-impact investments with these 
criteria in mind. They should seek to rebuild U.S. global leadership in 
networking and in the economic innovations that networking can create. 
Broadband investments should ``pull from the future.''
    A National Broadband Strategy should begin with America's colleges 
and universities, community colleges, K-12 schools, public libraries, 
hospitals, clinics, and the State, regional and national research and 
education networks that connect them and extend to reach government 
agencies, agricultural extension sites, and community centers across 
the Nation. A proven track record of innovating in networking and its 
applications, of deploying and continually upgrading advanced networks, 
and of extending those networks to the unserved and underserved across 
our Nation, lies not with telephone or cable companies, nor with most 
State governments, but with our Nation's colleges and universities and 
the State, regional and national research and education networks that 
this community has built, in many instances forged through partnerships 
with telecommunications providers and State agencies to achieve these 
goals.
    Stimulus broadband investments should be a strategic down payment 
on positioning our Nation to continue to be the world leader in 
economic growth and development, by implementing a more comprehensive 
and cohesive broadband strategy. That strategy should put innovation 
first and foremost, including the education of the next generation of 
innovators, workers, and consumers. Funds should be invested ways that 
lead to innovations in how we design, build, and use networks, and that 
lead to ground-breaking new applications--and new jobs--in education, 
healthcare, and commerce. We must be able to look back on these 
investments as having been the stimulus for the next wave of great 
innovations in the networking world.
    To ``pull from the future,'' we advocate (1) investing in our 
colleges and universities and their partners to launch next-generation 
infrastructure for research, education and health and (2) investing in 
State broadband plans that build on, and take leadership from, existing 
State and regional networks that already connect colleges and 
universities, community colleges, K-12 schools, libraries, hospitals, 
clinics, government agencies, agricultural extension sites, and 
community centers. We should advance and extend these network 
connections to truly 21st century standards. Investments in State plans 
should be done in a way that private sector companies can build upon 
the presence of State and regional networks in unserved and underserved 
communities to extend connectivity to households and businesses in the 
future.

            AMERICA'S BROADBAND FUTURE AND HIGHER EDUCATION

    America's broadband future is to lead internationally in the 
invention and widespread adoption of transformative applications that 
can exist only in a world of dramatically improved broadband 
infrastructure. This is a future that goes far beyond merely making 
email or web browsing faster or creating new ways to watch television. 
It is a future in which telemedicine delivers efficient and 
personalized healthcare to citizens across the land; telepresence saves 
energy costs in travel and sparks new forms of collaboration and social 
interaction; eLearning and eScience provide high-quality education to 
the underserved and allow all citizens to access scientific instruments 
and data; eGovernment creates a truly engaged and participatory 
democracy for one and all; and e-commerce allows all communities to 
participate more fully in the global economy.
    We propose an aggressive national broadband strategy that tightly 
couples innovation in our colleges and universities to a rapid 
upgrading of our commercial broadband infrastructure. This investment 
will enable a new generation of innovators and innovations on our 
campuses, emanating outward to the communities and regions surrounding 
those campuses, to unserved and underserved populations and regions, 
and to our Nation at large.
    The university community brought us ARPANET in the 1970s, the 
Internet in the 1980s, the graphical World Wide Web browser in the 
1990s, and Google and Facebook in the current decade. These and other 
transformative innovations from America's colleges and universities 
have generated countless millions of jobs and countless billions of 
dollars in economic growth, making America the world leader in 
information technology. Our colleges and universities continually 
educate new generations of innovators, workers, and consumers. They 
also have a proven track record, working in concert with State, 
regional, and national research and education networks that they 
created, of reaching unserved and underserved communities with 
connectivity and content. The potential for America's future is 
limitless if we support the unique innovative strengths of our colleges 
and universities, working with other public and private sector partners 
to expand access to and breadth of broadband services for all of 
America.
    This ``pull from the future'' strategy will, in a small number of 
years, generate huge economic stimulus and result in waves of 
transformative innovation emanating from gigabit per second enabled 
university faculty, staff, and student innovators, interacting with 
researchers at corporate and national laboratories, impacting 
businesses and consumers nationwide.

                           OUR RECOMMENDATION

    We recommend that under the American Recovery and Reinvestment Act, 
a strong partnership, possibly supported by an inter-agency agreement, 
be formed between the National Telecommunications and Information 
Administration (NTIA) and the National Science Foundation (NSF).
    Our colleges and universities--along with the State, regional, and 
national network partners that extend their reach and the reach of the 
Internet to the unserved and underserved across this Nation--are the 
right core engine to drive the ARRA broadband strategy, a continuation 
of the role they have continuously played since the 1980s when, with 
corporate partners and a visionary NSF investment, they gave birth to 
the public Internet. The partnership between NSF and NTIA will use the 
power of broadband to enable a new generation of innovators and 
innovations, setting the stage to roll out transformative applications 
and dramatically improved broadband infrastructure to society at large, 
revolutionizing healthcare, energy efficiency, education, 
transportation, public safety, and civic engagement, while improving 
sustainability, accelerating our economy, and creating the jobs of 
tomorrow--today. Complementary NTIA investments in State broadband 
plans that build on, and take leadership from, existing State and 
regional networks will extend 21st century networking to K-12 schools, 
libraries, hospitals, clinics, government agencies, agricultural 
extension sites, and community centers, and to unserved and underserved 
regions.
    Jump-starting the national broadband strategy with a comprehensive, 
coordinated and aggressive investment in our education and healthcare 
institutions to advance broadband at the high end offers the greatest 
imaginable leverage--accompanied by a proven track record of utilizing 
that leverage to increase America's competitiveness. It is exactly the 
kind of strategic investment imagined in the American Recovery and 
Reinvestment Act.
Why Use Colleges and Universities To Drive the ARRA Broadband Strategy?
    Colleges and Universities Are Innovation Incubators.--They brought 
us ARPANET in the 1970s, the Internet in the 1980s, the graphical World 
Wide Web browser in the 1990s, and Google and Facebook in the current 
decade. These and other transformative innovations from America's 
colleges and universities have generated countless millions of jobs and 
countless billions of dollars in economic growth, making America the 
world leader in information technology. We would not be here today, 
were it not for these engines of innovation.
    College and University Applications Drive Advances in Networking.--
These institutions are the heart of demanding, advanced scientific 
applications. The data-driven experiments, simulations, and analyses of 
science today require high-speed broadband to move data from remote 
instruments to the lab and to share massive data sets among scientists 
globally. Why does this matter? Because these scientists will help us 
model climate change, discover genetic markers for inherited diseases, 
and explore the potential of low carbon and renewable energy sources. 
Colleges and universities are also the source of innovation in 
America's healthcare system, providing cutting-edge health research, 
medical education, clinical care, and rural telemedicine. The bandwidth 
demands of today's advanced scientific applications--tens of gigabits 
per second--foreshadow similar bandwidth needs in homes and businesses 
in the future.
    Colleges and Universities Have a Four-Decade Proven Track Record in 
Deploying, Managing, Operating, and Continually Upgrading Advanced 
Networks.--With seed money from NSF in the 1980s and 1990s, CSNET, 
NSFNET, and Internet2 provided a critically important stimulus to the 
early growth of the Internet by bringing academic researchers and 
students online across the United States, at first in their labs, then 
in their dorm rooms. The research and education community has 
experience in deploying, managing, operating, and continually upgrading 
broadband networks on campuses; advanced optical networks through State 
and regional consortia; and the highest-performance optical nationwide 
backbone capabilities.
    Colleges and Universities Also Have a Proven Track Record, Working 
in Concert With State, Regional, and National Research and Education 
Networks That They Created, of Reaching Unserved and Underserved 
Communities With Connectivity and Content.--These State, regional, and 
national research and education networks--typically built in 
partnership with telecommunications providers and State agencies--today 
exist in 37 States and reach more than 55,000 community institutions 
such as community colleges, K-12 schools, libraries, hospitals, 
clinics, government agencies, agricultural extension sites, and 
community centers, as well as tribal colleges and universities, 
Hispanic-serving institutions, historically Black colleges and 
universities, Alaska Native-serving institutions, and Native Hawaiian-
serving institutions.
    Colleges and Universities Today Are Preparing Tomorrow's 
Innovators, Workers, and Consumers--Tomorrow's Doctors, Nurses, Police, 
Firefighters, Managers, Government Leaders, and Technologists.--
Students' experiences with high bandwidth connectivity on their 
campuses are driving their expectations and the domestic demand for new 
high-bandwidth applications that will advance America and be exportable 
to the rest of the advanced world. These experiences also prepare 
tomorrow's workforce, who must design, deploy, manage, and use a new 
generation of broadband networks based on 21st century architecture, 
infrastructure, and technology, as well as invent new waves of 
technology and applications. Today's students are tomorrow's 
innovators, workers, and consumers. Students must ``live in the 
future'' in order to bring this future to our communities across the 
Nation.
    Colleges and Universities Serve as Neutral Territory for Open, Non-
Proprietary, Unclassified Advances, Fostering Close Partnerships With 
and Among Industry and Government and Across All Sectors Ranging From 
Education to Healthcare.--America crucially needs this level of open 
non-proprietary synergy as it strives to rapidly unleash and support 
next-generation networking to achieve transformations in economic 
competitiveness, environmental sustainability and cost-effective 
healthcare. Universities have a track record of building systems 
software that lowers the barrier-to-entry for creating new applications 
that leverage the available bandwidth--systems software that includes 
the network-capable operating systems of the 1980s, the middleware and 
grid technologies of the 1990s, and the wide-area network services of 
the most recent decade. Universities also have a track record of 
partnership with industry and with corporate research organizations, 
driving new discoveries from concepts to products and services.
    Colleges and Universities Are Catalysts for Local, Regional, and 
National Economic Growth.--They are the hubs for local communities: 
culture, information, training, medical care, employment, and social 
interaction. This is especially true for rural and underserved areas. 
Outreach from colleges and universities to surrounding communities, 
counties, and States extends their reach and impact.
    In short, America's colleges and universities and their partners 
have the knowledge, the experience, the foundation network 
infrastructure, and the track record to jump-start a national broadband 
vision and strategy, leveraging Federal ARRA investments in ways that 
will spread broadband, create jobs, improve health, push the frontiers 
of science, and educate young people. Achieving this vision requires 
revolutionary advances in America's networking capability, and rapid 
but comprehensive and cohesive deployment of broadband capabilities 
into every geographic part of our Nation to serve research and 
education, healthcare, energy efficiency, education, transportation, 
public safety, civic engagement, and broad economic development.

                   NEEDED: JOINT NTIA-NSF LEADERSHIP

    The Internet is a globe-altering technology resulting from a 
decades-long collective effort by the Federal Government, the higher 
education community, and the corporate sector, rapidly joined by 
international partners as its importance emerged. ARRA recognizes the 
value of the Internet to every American by including $7.2 billion for 
universal broadband, with $2.5 billion to be administered by 
Agriculture's Rural Utility Service (RUS) program, and $4.7 billion by 
the National Telecommunication and Information Administration (NTIA) 
within the Department of Commerce.
    We recommend that under the ARRA, a strong partnership, possibly 
supported by an interagency agreement, be formed between the NTIA and 
the National Science Foundation (NSF). The NSF has played and will 
continue to play the role of supporting the development, deployment, 
and utilization of the most advanced networking capabilities and 
network applications. NSF's constituency is America's colleges and 
universities, supported by their regional, State, and national 
networking partners; and these higher education institutions have 
helped leverage NSF investments by extending innovative networks and 
applications to the full spectrum of education, community, and 
healthcare institutions. NTIA can leverage NSF's direct reach into 
academia and its experience and the successes it has enabled for 
communities across America.
    Universities are small cities, and therefore advances in university 
environments where the future will be rapidly prototyped are naturally 
stress-tested and can be rapidly transitioned. A set of coordinated 
investments that begin with research universities can expand to engage 
thousands of additional college and university campuses across the 
Nation as anchor partners in restoring the Nation's leadership in 
broadband deployment, utilization, and innovation for all Americans.
    Similarly, community colleges, tribal colleges, and other minority-
serving institutions are often centers of community cultural life, 
engines of economic innovation and entrepreneurship, and sources of the 
next generation of talented employees, employers, leaders and 
entrepreneurs. Providing these centers of community life with leading-
edge networks, tools, and the connections to higher education research 
and education throughout the Nation will accelerate economic growth and 
job creation in rural and underserved communities throughout the United 
States.
    As part of the initiative, colleges, universities and their 
partners will be expected to reach out to their surrounding 
communities, partnering with local governments or private sector 
carriers, to expand high-speed connectivity into the neighborhoods and 
community surrounding campuses. These ``concentrations of advanced 
broadband and innovation'' will serve as the catalyst for driving 
demand and leading to the next step in a national broadband strategy--
expanding advanced high-speed broadband to every home, school, and 
business in the Nation.
    There is a long and highly successful tradition of major research 
universities partnering with smaller institutions in unserved and 
underserved regions of the Nation to provide advanced connectivity, 
making these smaller institutions and regions more competitive. These 
efforts will continue, through the GigaPoPs (Gigabit-per-second Points 
of Presence) and RONs (Regional Optical Networks) and State and 
regional networks that are the heart of these regional initiatives. 
Universities will require their regional and national networks to 
partner with efforts (Federal and State) to reach out and connect their 
medical facilities with rural and underserved populations. They will be 
expected to partner with their States to connect, upgrade and extend 
networks connecting K-12 schools, libraries, public safety 
institutions, agriculture extension sites, government buildings, elder-
care centers and the like.
    Marrying NSF's higher education leadership with NTIA's 
telecommunications and policy leadership is precisely what is necessary 
to ensure that this generation of Americans, and future generations, 
will continue to compete and to lead in the global economy.

                      OPERATIONAL RECOMMENDATIONS

    There are two potentially complementary streams of funding: funding 
flowing through NSF to support network and applications research, 
creating the next generation of life-changing computing and 
communications innovations for all Americans; and funding flowing 
through NTIA that will extend today's--and tomorrow's--innovations 
broadly across our Nation to colleges, universities, minority-serving 
institutions and the communities that these institutions serve. We 
propose to coordinate these streams, thereby commingling innovation and 
access, accelerating the pace of change, and creating new jobs and 
economic prosperity within reach of any motivated young student or 
adult though our remarkable system of higher education. To do this will 
require coordination between NSF research programs and the NTIA ARRA 
broadband initiative. We recommend the following:
  --Creation of a joint network advisory group--possibly supported by a 
        formal inter-agency agreement--to give coherent direction to 
        efforts at NTIA and NSF, drawing on experts recommended by both 
        agencies.
  --NTIA grants in this portfolio, and recommend in this white paper, 
        should be selected through a peer-reviewed process, judged by 
        experts in networking and advanced applications.
  --State-led grants should build on, and take leadership from, 
        existing State and regional networks that already connect 
        colleges and universities, community colleges, K-12 schools, 
        libraries, hospitals, clinics, agricultural extension sites, 
        government agencies, and community centers--advancing and 
        extending those network connections to truly 21st century 
        standards. Investments in these State plans should be done in a 
        way that private sector companies can build upon them to extend 
        connectivity to households in the future.
  --Proposals with close linkage and collaboration with national labs 
        and corporate labs should be encouraged.
  --Similarly, proposals involving multiple universities, as well as 
        one or more regional networks and national networks, will be 
        viewed favorably. These multilateral efforts will create 
        network tools and applications that are interoperable and 
        scalable.

                   THE BIGGER PICTURE AND THE PAYOFF

    The revolution in broadband telecommunications networks and the 
accelerated rate of this growth internationally, along with the global 
explosion in knowledge and ready access to powerful research and 
communications tools, are creating unprecedented changes in the 
research and education community, along with profound changes in 
business, commerce, agriculture, government, and healthcare. New jobs, 
new industries, an explosion in entrepreneurship, access to quality 
heath care, new modes of community building, increased access to timely 
information and global markets, and the ability of an extended 
community to interact closely across space and time: all are dividends 
of this revolution in broadband networks and information technology.
    Throughout the United States, those colleges and universities--and 
the communities they serve--that have access to this global fabric of 
interconnected and interoperable broadband networks have created new 
forms of education and research, good jobs, medical and health 
information and care, communication, and the chance to participate in 
the affairs of the broader society. This global fabric brings to many 
the promise of inclusion, opportunity, wealth, and better health; for 
others, particularly among unserved or underserved regions and 
populations, access to these opportunities has been, at best, limited, 
and more often, non-existent. Until now.
    The big payoff to the economy and society of the investments 
proposed here will be the societal transformations described throughout 
this document. But the immediate stimulus to the economy in the form of 
jobs will be significant in the next 12-18 months, and will help to 
stabilize the country's rapid decline in high-tech employment. Upgrades 
to campus connectivity could be accomplished within the first 12 
months, with the bulk of the dollars going to telecommunications and 
cable suppliers, construction/installation companies, and network 
equipment manufacturers. Similar upgrades to broadband networks will 
occur within the next 18 months, with additional employment as a 
result. The Information Technology and Innovation Foundation conducted 
a study of the job-creating effects of new investments in broadband, 
using standard economic techniques for estimating direct, indirect and 
induced, and ``network effect'' job categories. Based upon the ITIF's 
methodology, an investment of approximately $1 billion in the higher 
education components of the overall program outlined in this white 
paper would result in the first year in 5,920 direct jobs, 15,421 
indirect and induced jobs, and 24,783 jobs from the ``network effect,'' 
for a total of 46,124 new or saved jobs, most in the private sector and 
many in small businesses.
    Transformative innovations from America's colleges and universities 
have generated countless millions of jobs and countless billions of 
dollars in economic growth, making America the world leader in 
information technology. Our colleges and universities continually 
educate new generations of innovators, workers, and consumers. They 
also have a proven track record, working in concert with State, 
regional, and national research and education networks that they 
created, of reaching unserved and underserved communities with 
connectivity and content.
    Over the past several decades the higher education community has 
accelerated many generations of networking, each a breathtaking advance 
that could not be deployed in the commercial sector because of the 
inherent risk. In building these advanced networks, higher education 
has always worked collaboratively with government and with the 
corporate community--with telecommunications companies and others with 
a stake in advanced technology and with significant research arms of 
their own--to create infrastructures that can quickly be hardened and 
deployed broadly. The broadband components of the American Recovery and 
Reinvestment Act hold the potential to bring not just today's Internet 
technology, but tomorrow's, to all Americans. The new investments in 
basic science will enable new advanced applications to ride on that 
next-generation infrastructure.
    The potential for America's future is limitless if we support the 
unique innovative strengths of our colleges and universities, working 
with other public and private sector partners to expand access to and 
breadth of broadband services for all of America. The robust advanced 
network infrastructure put into place by the research and education 
community and its partners is ready to serve as the foundation and 
springboard for the Nation's broadband strategy under the ARRA. We have 
a cohesive and comprehensive plan and the engine is ready. All that is 
needed is the fuel to drive it. Our institutions of higher education 
are the right core engine to launch the ARRA broadband strategy.
    The plan described in this white paper has been drafted by Ed 
Lazowska (University of Washington and the Computing Community 
Consortium), Larry Smarr (Calit2 and UCSD), Peter Lee (Carnegie Mellon 
University and the Computing Research Association), Chip Elliott (BBN 
Technologies and the GENI Project Office), Tom West (National 
LambdaRail), David Lassner (University of Hawaii), Doug Van Houweling 
(Internet2), Gary Bachula (Internet2), Louis Fox (WICHE), and Tim Lance 
(NYSERNet), in consultation with many others.
    This plan has been formally endorsed by Internet2, National 
LambdaRail, the Computing Community Consortium, the Computing Research 
Association, EDUCAUSE, The Quilt, StateNets, the EPSCoR/IDeA 
Foundation, the Western Interstate Commission for Higher Education, the 
Southeastern Universities Research Association, and multiple state 
boards of education and systems of higher education. Collectively, 
these organizations represent all 50 states, over 2,200 colleges and 
universities, 30 state and regional networks, 44 corporations, and 
international reach to networks in 90 countries. State and regional 
networks connect over 60,000 institutions including K-12 schools, 
community colleges, colleges and universities, libraries, hospitals, 
clinics, medical research centers, agricultural extension sites, 
museums, and community and performing arts centers.
    An earlier version of this white paper, titled ``Infrastructure for 
eScience and eLearning in Higher Education,'' is available at http://
www.cra.org/ccc/initiatives, along with essays on a number of related 
topics, including ``Information Technology R&D and U.S. Innovation,'' 
``Innovation in Networking,'' ``Big-Data Computing,'' and ``Security is 
Not a Commodity: The Road Forward for Cybersecurity Research.''
                                 ______
                                 
   Prepared Statement of the Schools, Health and Libraries Broadband 
                               Coalition

    The Schools, Health and Libraries Broadband (SHLB) Coalition\1\ 
respectfully submits this statement for the Hearing on ``Stimulating 
Hawaii's Economy: Impact of the American Recovery and Reinvestment Act 
of 2009.'' The mission of the Schools, Health and Libraries Broadband 
Coalition is to improve the broadband capabilities of schools, 
libraries and healthcare providers so that they can enhance the quality 
and availability of the essential services they provide to the public 
and serve underserved and unserved populations more effectively.
---------------------------------------------------------------------------
    \1\ The Schools, Health and Libraries Broadband Coalition consists 
of 48 members representing the K-12 schools, community colleges, 
universities, hospitals, healthcare providers, libraries and private 
companies. A complete list of members is contained at the end of this 
document.
---------------------------------------------------------------------------
Building High-Capacity Broadband to Community Anchor Institutions Is 
        Critically Important to America's Education, Health and 
        Learning
    The Internet has become a fundamental cornerstone of modern 
education, learning, healthcare delivery, economic growth, social 
interaction, job training, government services, and the dissemination 
of information and free speech. High-capacity broadband is the key 
infrastructure that K-12 schools, universities and colleges, libraries, 
hospitals, clinics and other healthcare providers need to provide 21st 
century education, information and health services. These institutions 
serve the most vulnerable segments of our population--rural, low-
income, disabled, elderly consumers, students, immigrants and many 
others.
    The SHLB Coalition is dedicated to ensuring that each and every 
school (including K-12 schools, colleges and universities), library and 
healthcare provider has robust, affordable, high-capacity, broadband 
connections. These anchor institutions use broadband services to 
provide essential services to millions of people every day. Providing 
high-capacity broadband to these institutions is a way to bring the 
benefits of broadband to the general public. For example,
  --Healthcare providers can use high-capacity broadband to exchange 
        detailed medical records, provide out-patient medical 
        monitoring (telemedicine), and many other health-related 
        services. Broadband capabilities can enhance the doctor-patient 
        relationship, provide immediate access to health information, 
        reduce the costs of healthcare, and save lives.
  --Libraries provide Internet access at no charge to millions of 
        people every day, including those who cannot afford to purchase 
        computers or broadband access at home and others who need 
        assistance, training or education about on-line services. 
        Library patrons use public access computers to do homework, 
        apply for jobs and e-government benefits, conduct research, and 
        engage in all that the Internet has to offer.
  --Schools use broadband connections to provide distance learning and 
        offer multimedia teaching programs that address many learning 
        styles and capabilities. In the 21st century, educators and 
        students require more access to information, people, tools and 
        resources. Broadband connections are redefining the education 
        model for administrators, teachers, students and parents alike. 
        ``Networked education'' makes education personalized, 
        equitable, relevant and cost-efficient, enabling improved 21st 
        century outcomes for students.
    Furthermore, building broadband to these institutions promotes jobs 
and economic recovery. Whether it is laying fiber optic cable, 
constructing antennas to provide high-bandwidth wireless capabilities, 
stimulating the development of content rich applications, or providing 
access to e-learning, e-health, or e-jobs, these investments in our 
future will provide thousands of American workers with high-tech 
employment. Building broadband networks to these anchor institutions 
will have the additional benefit of promoting economic growth in the 
region. The E-rate program has helped many schools and libraries obtain 
basic broadband connections to the Internet. The BTOP program can 
complement the E-rate program by funding the up-front deployment costs 
of high-capacity broadband.

The ARRA Gives a High Priority To Providing Broadband To Anchor 
        Institutions, but Unfortunately, the NOFA Does Not
    The SHLB Coalition is quite pleased that the American Recovery and 
Reinvestment Act (ARRA) specifically prioritizes broadband service for 
anchor institutions. Section 6001(b) states that one of the five 
purposes of the Broadband Technologies Opportunities Program is to:
            (3) provide broadband education, awareness, training, 
        access, equipment, and support to--
                    (A) schools, libraries, medical and healthcare 
                providers, community colleges and other institutions of 
                higher education, and other community support 
                organizations and entities to facilitate greater use of 
                broadband service by or through these organizations;
This statutory language correctly encourages the construction of high-
capacity broadband facilities to promote learning, healthcare and 
economic growth across America.
    Unfortunately, the grant rules issued in the Notice of Funds 
Availability (NOFA) on July 1 fall far short of the goal set forth in 
the legislation. By focusing almost exclusively on serving residential 
consumers, the application process does not give priority to the 
construction of high-capacity broadband to these critical institutions 
as is called for by the statutory language. In fact, it is almost 
impossible for an anchor institution to file an application that 
satisfies all of the requirements as now set forth in the NOFA. The 
grant process has discouraged many schools, libraries and healthcare 
entities from applying for funding, and raised concern that many 
worthwhile broadband funding projects will not be funded.
    To be clear, the SHLB Coalition supports the objective of getting 
broadband to every residential and business consumer. We respectfully 
suggest, however, that the NOFA may ``put the cart before the horse.'' 
It will do little good to build additional ``Last Mile'' broadband 
networks if there is no high capacity ``pipe'' that can carry the 
collective traffic from all the residential consumers back to the 
Internet backbone. There is a severe shortage of high-capacity 
broadband facilities in operation today, and the lack of these high-
capacity links to the Internet (often called ``backhaul'' facilities) 
creates a barrier to the widespread availability of greater broadband 
to the home. Building bigger broadband ``pipes'' into every anchor 
institution can help to solve the backhaul problem. High-capacity 
broadband connections to anchor institutions can serve as ``stepping 
stones'' or ``jumping off'' points that make it easier to provide Last 
Mile connections in the future. The SHLB Coalition strongly supports 
the notion that high-capacity broadband facilities should be open to 
interconnection by Last Mile providers so that residential consumers 
will ultimately benefit from the construction of the high-capacity 
broadband network. But requiring all applicants to serve residential 
service at the front end of the process simply discourages the build-
out of facilities to anchor institutions.
    Furthermore, there is simply not enough funding available to build 
Last Mile broadband facilities in every community. Focusing efforts on 
funding Last Mile connectivity, while beneficial for those communities 
that receive funding, will inevitably mean that many communities obtain 
no benefit from this broadband stimulus programs. We suggest that a 
much more efficient approach (creating more ``bang for the buck'') is 
to build high-capacity broadband networks to every anchor institution. 
Our analysis suggests that there is close to enough funding to build 
such a broadband ``pipe'' to every single hospital, library and school 
in the United States. In other words, every single community in the 
country could obtain the benefit of the BTOP stimulus program. This 
would provide a significant boost to economic development across the 
entire country.

The NOFA Should Be Changed To Give Greater Priority To Providing 
        Broadband Funding for Community Anchor Institutions
    NTIA and RUS have indicated that they plan to make changes to the 
application rules for the second and third rounds of funding. The SHLB 
Coalition respectfully presents its analysis of the problems with the 
current rules and suggests the following recommendations for changes to 
the rules for the second and third rounds of funding so that anchor 
institutions receive the priority that is set forth in the statutory 
language:
            The NOFA should be revised to establish a separate 
                    application category for networks dedicated to 
                    serving anchor institutions as a way to give 
                    greater priority to providing anchor institutions.
    The NOFA rules were not designed to accommodate the broadband 
networks dedicated to serve anchor institutions. The NOFA rules for 
Infrastructure grants create two different categories of applicants: 
``Last Mile'' applicants and ``Middle Mile'' applicants. Both of these 
categories are designed for networks providing service to residential 
consumers. Anchor institutions, however, do not directly provide 
broadband service residential consumers and usually obtain their own 
dedicated broadband networks. As a result, anchor institution networks 
found it difficult or sometimes impossible even to comply with the 
application requirements.
    Libraries, schools and healthcare institutions generally try to 
obtain their own dedicated broadband networks because that is the most 
efficient and least costly way to obtain broadband connectivity. These 
networks, for instance, allow individual schools, libraries and 
hospitals both to share (non-Internet) information among themselves in 
addition connecting onto the public Internet. These types of networks 
provide efficiencies, cost savings, reduced maintenance expenses, 
upgradable capacity specifically for high-capacity entities.
    Attached to this statement are two network diagrams of anchor 
institution networks in different States. As can be seen, a high-
capacity broadband connection connects each individual branch location 
to a central hub. The hub then uses an even higher capacity connection 
to the Internet. These networks do not provide service directly to 
residential consumers. (However, by allowing for interconnection with 
residential networks, community anchor institution networks can help 
facilitate greater residential access.)
    Unfortunately, the NOFA rules for Infrastructure projects do not 
contemplate this type of anchor institution network. ``Last Mile'' 
networks are those that provide service to residential consumers. 
``Middle Mile'' projects are defined as those that do not serve end 
users/consumers and connect a limited number of point-to-point 
locations. Anchor institution networks, however, include elements of 
both categories. They include both last mile facilities directly 
connecting end users (the school, library or healthcare provider) and 
they contain high-capacity point-to-point facilities that connect to 
the Internet backbone.
    The NOFA directs anchor institutions to apply under the Middle Mile 
category. Many of the BTOP application questions for Middle Mile 
applicants, however, are designed to elicit information concerning the 
services they will provide to residential and business consumers. The 
questions asked of ``Middle Mile'' applicants are inherently difficult 
or impossible for an anchor institution to answer. For instance, 
question 14 asks for the demographic information of the households and 
businesses of the contiguous census block traversed by each Middle Mile 
``span'' and for each ``last mile service area'' associated with the 
Middle Mile project. Question 18 asks Middle Mile applicants to 
identify the Last Mile ``service providers with whom the proposed 
network proposes to interconnect,'' and ``the projected end users that 
will be served by these proposed connections.'' Since anchor 
institution networks do not serve residences and businesses, these 
questions are simply not applicable. Unfortunately, the BTOP 
Application Guidelines state specifically that this information ``must 
be presented'' or ``the Application is deemed incomplete.'' This 
confusion is quite discouraging, especially considering that the 
statutory language gives clear priority to building broadband networks 
serving anchor institutions.
    The SHLB Coalition respectfully suggests that NTIA can rectify this 
situation and carry out the legislative intent by creating a separate 
category specifically for anchor institution networks. Designing a 
category of questions that are more applicable to these networks will 
encourage more anchor institutions to apply for funding. Applicants who 
sat on the sidelines in the first round will be able to consider 
applying in the next round, which would improve both the number and the 
overall quality of applications that are submitted and increase the 
opportunities for anchor institutions to receive broadband funding.
    In creating this new category, NTIA should design criteria for 
evaluating applications from anchor institutions that give greater 
priority to applications proposing high-capacity broadband networks to 
serve the needs of libraries, healthcare providers and schools. As 
discussed above, schools, healthcare providers and libraries provide 
essential services to millions of people. Furthermore, they are often 
the ``hub'' of their communities, and providing high-capacity broadband 
to them will enrich the economic and social environment around them. 
Therefore, NTIA should design criteria for evaluating applications from 
these entities that reward those applications that offer the greatest 
benefits to the general population. For instance, NTIA should give 
greater weight to anchor institution network applications that propose 
to provide a significant increase in the level of educational, medical 
and learning services to residents and businesses in the community. To 
be truly ``stimulative'', NTIA should encourage applicants both to 
build broadband and to demonstrate the beneficial uses of that 
broadband capability for the population they serve.
    Recommendation #1.--NTIA should create a separate category for 
networks dedicated to serving anchor institutions because these 
networks do not fit within either the Last Mile or Middle Mile 
categories. NTIA should give greater priority to funding anchor 
institutions and encourage anchor institution applicants to demonstrate 
how the additional broadband will benefit their constituents or the 
community at large.
            The NOFA must give greater weight to broadband applications 
                    that seek to connect community anchor institutions 
                    with truly high-capacity, ``future-proof'' 
                    broadband networks.
    The NOFA does not recognize that community anchor institutions 
often require very high-capacity bandwidth. Anchor institutions need 
enough capacity to handle multiple computers at the same time. Yet the 
NOFA sets forth a very low-speed and insufficient definition of 
broadband (768 kilobits per second download). This anemic definition 
does not send the right signals to applicants about the need to build 
high-capacity broadband networks needed for the future.
    The SHLB Coalition firmly believes that healthcare providers, 
libraries and schools need affordable access to ``future-proof'' high-
capacity, broadband technologies, especially in rural and low-income 
areas. Federal policy should encourage the deployment of high-capacity 
broadband networks that can provide a minimum of 100 Mbps to small 
entities and 1 Gbps or more to larger entities. Moreover, these 
broadband networks should be easily upgradable to meet the enormous 
growth in demand that is expected from high-definition video, distance 
learning, telemedicine, job-training and other societally-beneficial 
applications.
    We recognize that the definition of broadband at 768 Kbps is a 
floor and that the NOFA encourages applicants to offer greater capacity 
than this minimum amount. Nevertheless, for anchor institutions, this 
minimum threshold is not ``in the ballpark''. Small rural libraries, 
schools, and health clinics find that a T1 (1.5 Mbps) is a minimum 
necessity, and even this level of capacity is often inadequate. We 
respectfully suggest that the BTOP program should not be used to fund 
incremental increases in broadband connectivity. Rather, the BTOP 
program should build for the future. Given the size of the Federal 
deficit, the BTOP program is not likely to provide an ongoing source of 
funding beyond the life of this particular program. Rather than invest 
in interim technologies that will be overcome by demand in a short 
period of time, the BTOP program should invest once in long-lasting 
facilities that are scalable to serve the Nation's broadband needs for 
decades. In fact, the statutory language specifically says that funds 
should only be awarded to projects that would not have been built 
without Federal funding, which is an indication that Congress sought to 
fund high-capacity broadband projects that are too expensive to build 
from existing revenues. The legislation also emphasizes the need to 
create jobs by building new infrastructure, and to restore America's 
leadership in broadband capabilities. Using BTOP funds to allow 
entities simply to order additional broadband circuits using existing 
technologies or build incremental networks that barely meet the 768 
kbps threshold would not be consistent with the purposes of creating 
the BTOP program and the needs of America's economy and consumers.
    Thus, the SHLB Coalition respectfully suggests that NTIA adopt a 
definition of broadband for anchor institutions that is more consistent 
with their needs and that establishes a goal of delivering 100 Mbps, 
scalable up to 1 Gbps, to every one of these organizations.
    Recommendation #2.--NTIA should create a separate definition of 
high-capacity broadband for anchor institutions with the goal of 
delivering 100 Mbps to 1 Gbps to these organizations.
            The NOFA must allow funding for all anchor institutions, 
                    not just those in unserved and underserved areas.
    The NOFA prevents many deserving anchor institutions from applying 
for funding by applying limits on anchor institutions that are not 
contained in the statutory language. For instance, the NOFA says that 
all applicants must provide service to ``unserved'' or ``underserved'' 
areas. While this is an understandable requirement for residential 
service, these limitations should not be applied to community anchor 
institutions.
    The statutory language in section 6001(b)(3) of the ARRA does not 
apply the ``unserved''/''underserved'' restrictions to broadband 
services to anchor institutions. Congress wisely chose not to employ 
this ``unserved''/``underserved'' restriction to healthcare providers, 
educational institutions and libraries because it recognized that these 
critical institutions provide essential services to the community no 
matter where they are located (whether urban, suburban or rural).
    The limitation to ``unserved/underserved'' areas is even more 
limiting because of the way these terms are defined. The rules measure 
whether an area is unserved/underserved based on whether or not 
residential consumers have access to 768 kbps bandwidth (download). But 
the bandwidth available to residential consumers should be irrelevant 
to whether the anchor institution can obtain broadband funding. If a 
hospital needs broadband funding for a fiber connection to improve the 
quality of the healthcare it provides to patients, it should be able to 
do so. If a community college needs broadband funding for a 100 Mbps 
connection to provide job training instruction it should be able to do 
so. If a library needs broadband funding for a wireless connection that 
will allow its patrons to obtain unemployment benefits or apply for 
jobs, it should be able to do so. Under the current rules, however, if 
this hospital, school or library happens to be located in area where 
the residences can purchase broadband service, the hospital, school or 
library is not allowed to receive funding. The eligibility of these 
institutions to receive broadband funding should not be dictated by the 
definitions and geographic boundaries that might apply to households. 
Even in areas where residential consumers may have broadband as 
currently defined by NTIA, the library, school or healthcare provider 
may need much greater bandwidth to support multiple users and more 
complex applications. In other words, all libraries, healthcare 
providers and schools that can demonstrate a lack of broadband 
capabilities or a need for greater broadband to serve their mission 
should be eligible to apply for funding.
    Further, the 768 kbps definition is so slow that almost every area 
of the country has that level of service from cellular service alone. 
Many anchor institution applicants have found that there are extremely 
few unserved/underserved geographic areas in their States, and some 
States may have no unserved/underserved areas at all. Thus, this narrow 
definition of broadband makes it difficult or impossible for many 
deserving anchor institutions to acquire funding to improve their 
broadband connections.
    Recommendation #3.--All community anchor institutions including 
those in urban, suburban and rural areas should be eligible to apply 
for broadband funds, because of the essential services they provide to 
the public. NTIA should not limit funding for anchor institutions to 
those institutions that are in unserved/underserved areas.
            The NOFA should be changed to award additional ``points'' 
                    to those Last Mile and Middle Mile applicants that 
                    connect anchor institutions.
    In addition to creating a separate category for anchor institution 
networks, Last Mile and Middle Mile applicants should also be given 
greater incentives to serve anchor institutions in their applications. 
There may be some areas of the country where it is not feasible to 
construct or provide a network dedicated to anchor institutions. In 
these areas, anchor institutions will need to acquire broadband service 
from a Last Mile or Middle Mile provider. The criteria for scoring Last 
Mile and Middle applicants should be adjusted to give greater weight to 
Last Mile and Middle Mile applicants that serve anchor institutions.
    We recognize that NTIA has encouraged applicants in these 
categories to include service to anchor institutions in their 
applications. Unfortunately, however, the NOFA does not give Last Mile 
and Middle Mile applicants enough ``points'' for serving anchor 
institutions. The BIP process only gives applicants a maximum of five 
additional ``points'' for offering discounted rates to all ``critical 
community facilities.'' (NOFA, Section VII.A.1.c.iv.) The BTOP process 
does not identify any particular ``points'' for service to these 
entities. We do not believe that this system gives anchor institutions 
the priority that they deserve under the statutory language.
    In order to ensure that service providers have sufficient 
incentives to serve anchor institutions, we suggest that the next NOFA 
should increase the amount of ``points'' available for applications 
that seek to connect anchor institutions. Furthermore, the amount of 
points awarded to an application should increase the more bandwidth 
that the applicant proposes to offer the anchor institution.
    Recommendation #4.--NTIA should award more ``points'' for Last Mile 
and Middle Mile applications that propose to serve anchor institutions 
with high-capacity broadband. Furthermore, more points should be 
awarded for higher-bandwidth services to these institutions.
            The NOFA does not make enough funding available for 
                    expanding public computer center capacity.
    The ARRA says that ``not less than $200,000,000 shall be available 
for competitive grants for expanding public computer center capacity, 
including at community colleges and public libraries.'' The NOFA makes 
only $50 million available in this round of funding. Not only is this 
less than one-third of the minimum amount directed by the statute, this 
amount does not reflect the enormous need for libraries, community 
colleges and other public computer centers for greater funding. 
Especially in these challenging economic times, the general public has 
a great need for expanded public access to the Internet to search for 
and apply for jobs, to apply for e-government benefits, to take job 
training classes, and to engage in distance learning. Furthermore, 
expanding public computer center capacity works hand-in-hand with 
greater broadband deployment--increasing the capacity of larger public 
computer centers will drive the deployment of greater broadband.
    Recommendation #5.--NTIA should allocate more than the minimum 
amount of funding for projects to expand public computer center 
capacity.
            The application process is cumbersome and difficult.
    Many applicants for funding have encountered enormous obstacles in 
simply submitting an application. We appreciate the complexity of this 
process and we know that the government agencies have worked extremely 
hard to make the application process as smooth as possible. 
Nevertheless, the application process could be significantly improved 
in subsequent rounds of funding. The following lists some of our 
recommendations to improve the mechanics of the application process:
  --Eliminate the ``infection rule.'' The government has declared that 
        if there is one flaw in an application, the entire application 
        will be rejected. This practice encourages applicants to sub-
        divide their applications into multiple smaller units to 
        increase the odds that some of their proposals are adopted. The 
        practical impact is to increase the raw numbers of applicants 
        and to discourage large aggregated applications. It also 
        increases the workload on both applicants and on the government 
        reviewers.
  --The rules discuss the ``Middle Mile span'' as if the applicant were 
        constructing one span; in fact, most anchor institution 
        networks include multiple spans to each library, healthcare 
        building or school.
  --The rules unnecessarily require ``Middle Mile'' applicants to 
        provide details of the census blocks traversed by each 
        ``span'', even if the ``span'' does not terminate in the census 
        block and provides no benefit to the residents of the census 
        block.
  --The process allows Middle Mile applicants to apply for funding as 
        long as they serve one area that is unserved/underserved. Thus 
        a Middle Mile applicant may serve some ``served'' areas as well 
        as unserved/underserved areas. However, the application process 
        requires ``Middle Mile'' applicants to label each funded 
        service area as ``unserved'' or ``underserved''. Unlike the BIP 
        process, there is currently no option to identify a service 
        area as served.
  --The rules require Middle Mile applicants to identify the ``Last 
        Mile'' service providers that will interconnect with the Middle 
        Mile facilities. But network providers that are dedicated to 
        anchor institutions do not know in advance what ``Last Mile'' 
        providers that will interconnect with their facilities.
  --The rules make it difficult for an applicant to determine whether 
        or not a particular geographic region is unserved/underserved. 
        Most of this information is held by the broadband service 
        providers, but this information is generally not made available 
        to the public. Furthermore, the rules allow a service provider 
        to challenge an application with evidence that an area is 
        ``served'', and the applicant may have no opportunity to review 
        or contest that information. NTIA should establish a process to 
        make broadband deployment information available to the public; 
        and applicants should be able to review and challenge data 
        submitted by the industry that seeks to eliminate a proposed 
        application.
  --The definitions of ``proposed funded service area'' and ``service 
        area'' are quite confusing, particularly as they apply to 
        networks that are dedicated to serving on anchor institutions 
        and not the surrounding community.
  --The online application process has very low page limits for some 
        information, such as network design and budget information. 
        Some applicants had 35-40 pages worth of material that was 
        requested by the NOFA, but the on-line system limited the page 
        length to 4 or 5 pages.
  --There remain several open questions concerning the compatibility of 
        these funding programs and the E-rate. These two programs 
        should be able to work hand-in-hand: the BTOP program provides 
        funding for the up-front installation costs, while the E-rate 
        supports ongoing monthly expenses. However, some of the BTOP 
        processes (such as encouraging schools and libraries to 
        contract with vendors prior to receiving funding, and 
        encouraging re-selling capacity to provide residential service) 
        may not be fully consistent with the E-rate processes. Some 
        schools and libraries are reluctant to apply for BTOP funding 
        for fear of losing their E-rate support. Additional 
        clarification of these issues would help schools and libraries 
        benefit from the BTOP program.
    Recommendation #6.--NTIA should simplify the application process 
and design rules that are more consistent with networks that are 
dedicated to serve anchor institutions as set forth above.
Conclusion: NTIA Should Give Greater Priority To Building High-Capacity 
        Networks To Serve Anchor Institutions in the Second and Third 
        Rounds of Funding
    In conclusion, funding anchor institution networks will bring very 
high-capacity, future-proof facilities into every community in the 
country. Funding such capacity will have enormous economic and social 
benefits for the entire Nation. We appreciate the opportunity to work 
with the Committee to address these issues as you continue your 
oversight over the American Recovery and Reinvestment Act.
                                 ______
                                 

  Appendix A.--Members of the Schools, Health and Libraries Broadband 
                               Coalition

              (48 members--updated as of august 21, 2009)
    Sean McLaughlin, Access Humboldt; George Boggs, American 
Association of Community Colleges; Mary Alice Baish, American 
Association of Law Libraries; Kristin Welsh, American Hospital 
Association; Lynne Bradley, American Library Association; Prue Adler, 
Association of Research Libraries (ARL); Shmuel Feld, Benton 
Foundation; Jill Nishi, Bill & Melinda Gates Foundation; Malkia Cyril, 
Center for Media Justice; Dee Davis, Center for Rural Strategies; Susan 
McVey, Chief Officers of State Library Agencies; Don Means, Community 
Telestructure Initiative; Keith Krueger, Consortium for School 
Networking; Joel Kelsey, Consumer's Union; Gene Wilhoit, Council of 
Chief State School Officers; Lillian Kellogg, Education Networks of 
America; Wendy Wigen, EDUCAUSE; Ben Scott, Free Press; H. Stephen 
Lieber, Healthcare Information and Management Systems Society (HIMSS); 
Rick Whitt, Google Inc.; Hilary Goldmann, International Society for 
Technology in Education; Marianne Chitwood, Indiana's Higher Education 
Network (I-Light); Chris Mullins, Instructional Telecommunications 
Council; Gary Bachula, Internet2; Bob Handell, KeyOn Communications; 
Mike Phillips, Lonestar Education and Research Network; Amalia Deloney, 
Main Street Project; Andrew J. Schwartzman, Media Access Project; Beth 
McConnell, Media and Democracy Coalition; Todd Wolfson, Media 
Mobilizing Project; Don Welch, Merit Network, Inc.; Paula Boyd, 
Microsoft; Helen DiMichiel, National Alliance for Media, Arts and 
Culture; Alex Nogales, National Hispanic Media Coalition; Tom West, 
National Lambda Rail (NLR); Steve Solomon, National Medical Wireless 
Broadband Alliance, LLC.; Alan Morgan, National Rural Health 
Association; Michael Calabrese, New America Foundation; Tim Lance, New 
York State Education and Research Network (NYSERNet); Joe Freddoso, 
North Carolina Research and Education Network; George Loftus, Ocean 
State Higher Education & Administrative Network (OSHEAN); Harold Feld, 
Public Knowledge; Jen Leasure, The Quilt; Brian Quigley, Sunesys; 
Deanne Cuellar, Texas Media Empowerment Project; John Reynolds, 21st 
Century Libraries; Susan Benton, Urban Libraries Council; Amina 
Fazlullah, U.S. Public Interest Research Group (USPIRG).

  Appendix B.--Network Diagrams of the Southwestern Wisconsin Library 
                  System and Jackson County, Michigan






    Chairman Inouye. Now, Doctor, you have indicated that you 
have many concerns, one is that you don't have sufficient data 
to proceed on, and you're making plans without these--the data. 
If that is the case, what do you foresee as the outcome of the 
expenditures?
    Dr. Lassner. So, let me simply classify the investment in 
infrastructure to two parts. One is the part we've been most 
involved in, in Hawaii, which is what I call the anchor 
tenants, reaching schools, libraries, healthcare facilities. In 
those areas, I think, the parties interested in deploying 
infrastructure do have pretty good data. I mean, we know 
exactly what the connection is at every public school, every 
public library, and so forth.
    Where we're really missing data is with the bolder 
objective of having the entire Nation catch up with 21st 
century broadband connectivity to every home and business in 
the State and in the Nation, and that's where there really is 
no data available, and that's what your Broadband Data 
Improvement Act will really help with.
    My guess is that most of the funds will struggle to find 
their way into some of these anchor institution proposals, 
which frankly is good for schools and libraries, but we'll have 
quite a bit of work ahead of us in terms of advancing the level 
of service to homes and businesses that we really require.
    Chairman Inouye. Your response has been that of concern to 
me. So, if I make--and I call upon my staff to confer with 
you--to draft a letter of concerns to the appropriate agencies 
in the United States.
    Dr. Lassner. I would be delighted, in fact, your staff both 
here and in Washington has been unbelievably supportive and 
helpful as we've all struggled through this, so I thank you and 
them for that assistance.
    Chairman Inouye. As the former chairman of the Commerce 
Committee, your response doesn't please me.
    Dr. Lassner. Right, I understand that. I think you wanted 
honest feedback, so----
    Chairman Inouye. Now, if the funds are spent appropriately, 
can you describe, for the record, what are the changes that you 
can anticipate? Now, for example, there was a time when we had 
telephone, and that--I can still recall, four people, four 
houses being on that one line. Today you have cell phones, you 
have BlackBerry, you have iPhones, and everything else. What 
can we anticipate from this?
    Dr. Lassner. So, let me describe, maybe, a scenario in a 
typical Hawaii multi-generational home. Not today, but maybe in 
5 years, that we might have two students doing schoolwork, one 
might be preparing videos, some of the great work done on the 
Hawaiian coast in creative media production. Somebody creating 
a public service announcement or feature-length video, 
uploading it to a server in high definition for national and 
international distribution, while another kid in the home is 
participating in distance learning.
    Maybe the mother is teleworking at home in a high-
definition video conference with colleagues downtown, so that 
they don't have to drive into the city to do their work. At the 
same time, perhaps the grandmother is at home having a 
teleconsult with her physician, perhaps on another island, this 
could be taking place on any island. And all of that together 
requires much more capacity than we have today, and it requires 
bidirectional capacity. So, shifting the view that this is 
about pumping content into homes and businesses, but rather, 
viewing our homes and our businesses as originators of content 
and active communicators, including the kinds of high-
definition video that we're getting used to today--I mean, 
that's a fantastic opportunity that will improve our economic 
competitiveness and our sustainability and reduce stress on our 
transportation systems and the roads that these guys are 
struggling to keep up with.
    Chairman Inouye. Well, I'm from an older generation, a 
generation that had the time and inclination to carry on 
personal communications--meeting people, socializing, et 
cetera. Will this technology now do away with that?
    Dr. Lassner. Absolutely not. But, I guess what I'd say is 
that, you know, the newer generation, and I guess I'm somewhere 
in between at this point, is building their social 
relationships online, as well. And they're not replacing their 
interpersonal relationships and communications, but they're 
extending them, in two ways.
    One is, people are meeting, not just their neighbors who 
happen to live on their street, but friends and colleagues who 
share common interests anywhere in the State, around the 
Nation, and around the world.
    The second is, that as we begin to push this technology, 
some of the new technologies for--and we sometimes use the 
buzzword ``telepresence''--provide the illusion of being there. 
It's almost like the hollow deck on ``Star Trek''--you can 
start thinking about actually sitting across the table, as we 
are today--and having an image that looks just as good as if 
we're sitting here, but without you, for example, having to 
endure that 10-hour set of flights from Washington to come back 
here to talk with us.
    So, that would be a good example of setting up a real 
hearing room that looks like a hearing room, where you could 
actually have better contact with your constituents than you're 
able to have during the limited amount of time you're able to 
enjoy Hawaii.
    Chairman Inouye. I'd rather go around shaking hands.
    Dr. Lassner. We're not quite there, yet.
    Chairman Inouye. Well, I'd like to thank all of you for 
your testimony, it's been extremely helpful. And if I may, 
we'll be submitting written questions for your response. Thank 
you very much.
    If you have any addendums or corrections you'd like to 
make, please feel free to do so.
    Thank you.
    Dr. Lassner. Thank you, Chair.
    Chairman Inouye. Our next witness is the honorable mayor of 
the city and county of Honolulu. This is just the mayor?
    Now that the hat has been transferred to the--I'd like to 
now recognize and call upon the distinguished mayor of the city 
and county of Honolulu, Mayor Mufi Hannemann. Mayor Hannemann.

STATEMENT OF MUFI HANNEMANN, MAYOR, CITY AND COUNTY OF 
            HONOLULU
    Mr. Hannemann. Good morning, Mr. Chair, and thank you very 
much for this opportunity to come before you on behalf of the 
Hawaii Council of Mayors. I'm very, very pleased to be joined 
this morning by my esteemed colleagues from Maui, Mayor 
Charmaine Tavares, from the Big Island of Hawaii, Mayor Billy 
Kenoi, and from Kauai, Mayor Bernard Carvalho.
    We are working in unprecedented ways, Mr. Chair, in terms 
of maximizing the opportunities that we see with ARRA, 
certainly here with the State legislature, and certainly within 
our own counties. The Hawaii Council of Mayors was formed very 
recently, and I can't be more pleased with the energy, 
enthusiasm, and ideas that have come from my fellow colleagues.
    By the same token, as you know, we've been very active with 
the U.S. Conference of Mayors, very directly involved in 
lobbying on behalf of our respective counties, but also fellow 
mayors across the country.
    And we also want to extend publicly our appreciation, our 
support to you for your leadership, for you guidance in many of 
these areas that are not just benefiting our counties, but also 
counties throughout America.
    Today, my remarks are going to be focused on five areas, 
with respect to potential benefits and impacts of our job 
training, Community Development Block Grants (CDBG), 
homelessness funding, public safety, and broadband.
    Let me begin with job training. Basically the benefits fall 
in two areas, one with our youth and obviously with our adult 
segment.
    We have seen immediate benefits with our youth. Summer 
employment was able to be achieved. We saw on Oahu, 370 young 
people were employed on the Big Island, 221 on Kauai, and 65 on 
Maui. So we were able to help families for the fact that their 
teenagers were finding meaningful employment. We also hope that 
through the process we were able to instill a semblance of 
public service, that these young people will recognize that 
government can be a good career and hopefully this is the 
beginning of continued service in government.
    With respect to our adult population, we were able to 
provide training, especially for employment opportunities, and 
for dislocated workers, certainly some additional assistance in 
that regard. And so, we expect to serve 400 individuals on 
Oahu, Hawaii, 300, Maui, 117, and Kauai, 11, as a result of 
this funding under the job training program.
    Last but not least, always--we're very interested in 
helping our social services providers in providing meals for 
our seniors and our homeless population. We expect to serve 
here on Oahu some 28,000 meals to about 110 seniors as a result 
of this additional funding through the ARRA program.
    Second, on community development block grants. This is a 
program that is near and dear to every mayor's heart. We have 
seen improving track record of being able to work with our 
social service providers in providing needs across the board.
    We want to thank you specifically, Mr. Chair, for your 
timely intervention in making sure that the Senate was also 
able to put in some funding for us. And you know, when we 
visited you, we had to educate more of your colleagues with 
respect to this very important funding that we wanted to see in 
our package, and you came through, as usual.
    There's going to be more than $4 million in additional 
community development block grants that we'll be able to use to 
help our communities. Once the funds are awarded, we expect to 
also put it to good use as we've done with the regular funding 
of the CDBG during the regular appropriation process.
    Let me turn to homelessness, Mr. Chair. Certainly the 
opportunity we see with our communities is that these monies 
can be used on the preventive side of homelessness. It's an 
issue that we are far beyond denial, the counties are working 
very, very hard to ensure that we provide timely funding in 
this area. And the $3.8 million that was recently awarded to 
Oahu will really help us in providing opportunities for our 
homeless population to pay their rent, electricity bills, 
receive credit counseling, housing placement, outreach, and 
other legal services.
    In the county of Hawaii, the nonprofit office of social 
ministry expects to draw down on the first installment of a 3-
year, $707,850 grant on September 1, so there's going to be an 
immediate opportunity to help our friends on the Big Island as 
a result of this.
    Public safety--I have said time and time again, no more 
important responsibility for every county mayor then to ensure 
public safety. And we're very, very pleased, that through the 
ARRA program, we're going to be able to tap into that. We know 
that in tough economic times crime tends to rise. So, this 
proactive way of meeting some of the critical needs of our law 
enforcement offices is certainly very much appreciated.
    Through the Edward Byrne memorial justice assistance grant, 
$4.3 million to all the counties, and basically for Hawaii 
County, the county of Maui, the county of Kauai, and the city 
and county of Honolulu, these funds will go basically in two 
areas, Mr. Chair; one in the hiring of additional personnel in 
law enforcement, and second, especially in the area of IT. We 
need to upgrade our technology, we need to ensure that the 
proper software, equipment, and training is done, and these 
funds will go a long way in that regard.
    We also want to take advantage of the COPS program funding. 
And once again, it couldn't have come at a better time for my 
city. As a result of being able to tap into some $5 million in 
the COPS program, we're going to be able to hire 21 new 
additional police officers. And I know I speak on behalf of the 
Honolulu Police Department, how much they appreciate this. In 
the county of Hawaii, they also will be able to fund some 16 
community policing positions over 3 years as a result of this 
wonderful opportunity through the COPS program.
    Let me now touch upon our broadband. Certainly it's a very 
timely topic having had the discussion in the previous panel. 
In the broadband initiative, I really want to pitch the 
opportunities for my neighbor island colleagues. Certainly the 
broadband funding will help our three neighbor island counties 
and the private sector to expand broadband access to public--
for public safety purposes on their islands, especially in 
remote areas. We'll be able to see the existing neighbor island 
broadband infrastructure perhaps become far more resilient, 
which will help them, especially during these public safety 
disasters that we're getting a lot of training in of late, most 
recently with the threat of Felicia that fortunately did not 
hit us with the kind of impact they had talked about initially.
    Also, another aspect of the broadband funding will help my 
fellow colleagues on the neighbor islands with the State 
hospital system. We don't have that situation here on Oahu, but 
I know it will help them to retain staff, improve equipment to 
ensure that quality medical care is available for all 
residents.
    Mr. Chair, I also want to mention, even though it's not 
part of our discussion this morning, since it was covered so 
well by the previous panel, but I want to assure you that all 
my fellow mayors and I are working very hard on the permitting 
aspect of the whole initiative coming from the Federal 
Government.
    We said from the very beginning, as we met through the 
Hawaii Council of Mayors, we don't want to be the roadblock for 
any opportunity that may occur. So, we're working very closely 
with our State counterparts. We're looking for innovative ways 
to accelerate the permitting process. We know that time is 
money and certainly with this golden opportunity we have now to 
create jobs, we want to do that.
    So, my county, for example, thanks the leadership of my 
department of planning and permitting director. The self-
certification process has been welcome by both the State and 
the city. In other words, certification that has to be approved 
by a State agency or county agency, we're basically saying, you 
know, ``Why don't we accelerate that by having the State--
basically having the go-ahead without having to come for 
specific or as many county approvals?'' We've asked the State 
to reciprocate and they're doing so. So, I think this will help 
us assure that these projects are being done.
    That basically in a nutshell is my testimony. I tried to be 
as concise and precise as we have all submitted testimony to 
you.
    And I just wanted to close with these remarks, Mr. Chair, 
that fiscal responsibility is very important. All of our county 
governments are doing our best to ensure that these public 
dollars, whether it comes from a local funding base or from a 
Federal funding base or the State, are being used wisely.
    But it also has to always be tempered with compassion. And 
certainly the grants that I have outlined this morning go to 
serve our most vulnerable, our needy, those that truly need 
assistance, and we applaud your efforts and our congressional 
delegations effort, and the Obama administration for making 
these funding opportunities available for your neighbor island 
counties here in the State of Hawaii, as well as the city and 
county of Honolulu.
    [The statement follows:]

                  Prepared Statement of Mufi Hannemann

    Mr. Chairman, thank you for this opportunity to share with you the 
perspective of the Hawaii Council of Mayors on the American Recovery 
and Reinvestment Act. I would like to take a moment to introduce the 
mayors in attendance. Billy Kenoi, Mayor of Hawaii County, and 
Charmaine Tavares, Mayor of Maui County. Mayor Bernard Carvalho could 
not join us but sends his regards. We were asked to provide details of 
the social services program funding provided under the act.

                              JOB TRAINING

    Throughout our counties, the job training funding has been an 
immediate success. The funds were received quickly and each county was 
able to employ economically disadvantaged youth during the summer. This 
program provided employment experience to youth and supplemented the 
work force of government and non-profit organizations. It served 370 
youth on Oahu, 200 on the Big Island, 21 from Kauai, and 65 on Maui. 
Young people earned money this summer to purchase clothes, school 
supplies, and otherwise contribute to the family income. We hope that a 
summer job program will be funded again so that our Nation's youth can 
earn wages to supplement their family income, gain valuable work 
experience, and provide a service to their communities.
    Adult and dislocated worker are beginning to see assistance from 
the counties through programs funded under the ARRA. Oahu expects to 
serve 400 individuals, Hawaii will serve about 300, Maui will serve 
117, and Kauai will serve 11. These programs are intended to provide 
training in high demand occupations and provide support services for 
employment of laid-off workers and low-income individuals. In addition, 
money allocated for group dining and home-delivered meal programs is 
being used to serve 28,000 meals to about 110 seniors on Oahu in fiscal 
year 2010 through Meals on Wheels.

                                  CDBG

    The more than $4 million in additional Community Development Block 
Grant program funding will allow the counties to fund capital 
improvement projects for non-profits serving our communities, legal 
services programs, and energy efficiency upgrades to save energy and 
help reduce utility costs. Unfortunately, while the counties have 
selected the programs, the funding has not yet reached the service 
providers. Once the funds are awarded, the CDBG-funded programs 
statewide are expected to provide the equivalent of full-time 
employment for 35 residents over the course of a year. The jobs will be 
in construction and direct provision of services to the community.
    And, Mr. Chairman, permit me to again thank you, on behalf of the 
U.S. Conference of Mayors, for championing the CDBG funding among your 
Senate colleagues. Your efforts were acknowledged at the mayors' 
meeting in Providence, Rhode Island.

                              HOMELESSNESS

    The City and County of Honolulu and County of Hawaii were awarded 
Homelessness Prevention and Rapid Rehousing ARRA funds. The sum of 
$3,873,272 in contracts was recently awarded to Oahu entities to 
provide rental assistance, case management, credit counseling, housing 
placement, outreach, and legal services. The organizations should start 
providing these much-needed services by next month. In the County of 
Hawaii, the non-profit Office of Social Ministry expects to draw down 
the first installment of a 3-year $707,850 grant on September 1 to pay 
rental deposits, utility bills, and provide other assistance to the 
homeless or families at risk of becoming homeless.

                             PUBLIC SAFETY

    Another component of the ARRA that will directly help our 
communities is the funding for law enforcement. The Edward Byrne 
Memorial Justice Assistance Grant provided about $4.3 million directly 
to all four counties. Hawaii County will be hiring two police evidence 
specialists and upgrading the computer server used by the prosecutor's 
office. The County of Maui will use its money to upgrade police 
department computer equipment and fund a community violence program 
manager, while the Prosecuting Attorney will hire an attorney and 
clerical support for the juvenile prosecution program. The County of 
Kauai will be using the funding to improve training, update equipment, 
and hire a part-time process server and special investigator. The Kauai 
Prosecuting Attorney's office will be able to hire four part-time staff 
members and two full-time staff for the domestic violence prosecution 
unit, property crime prosecution unit, and for a special prosecuting 
attorney. On Oahu, these funds will be used to employ civilian staff to 
increase community policing resources, provide a psychiatric nurse to 
improve coordination between the criminal justice and mental health 
systems, hire an evidence custodian, and hire an additional 5.5 staff 
members for the Prosecuting Attorney's drug court program. Some 
equipment and program expansions are also planned. While the grant 
award has been processed, our internal processes are working toward 
implementation of these programs. The new staff should be hired shortly 
and the equipment should be put out to bid soon.
    The Honolulu Police Department was recently awarded more than $5 
million from the Community Oriented Policing Services Hiring Recovery 
Program. This competitive grant award provides the salaries for 21 new 
police officers over 3 years. HPD is working to determine the 
allocation of these new-hire positions and planning for a recruit 
training class. The recruit selection is nearly complete. The County of 
Hawaii has applied for a COPS grant to fund 16 community policing 
positions for 3 years, and hopes that request will be funded in a 
future review of COPS applications.

                               BROADBAND

    Another critical public safety initiative under ARRA is a 
partnership between the three Neighbor Island counties and the private 
sector to expand broadband access for public safety purposes on Maui, 
Kauai, and Hawaii. This competitive grant application to the U.S. 
Department of Agriculture's Rural Utilities Service and the National 
Telecommunications and Information Administration is designed to help 
protect the public by delivering broadband service to remote locations 
for security, law enforcement, civil defense, and emergency medical 
assistance purposes. The project will also make the existing Neighbor 
Island broadband infrastructure far more resilient, which will help 
protect public safety during natural disasters and emergencies.
    Another prong of the ARRA effort to improve social services is 
funding to the State hospital system. While this did not benefit 
Honolulu, my fellow mayors are pleased by the direct funding provided 
to retain staff and improve equipment to ensure that quality medical 
care is available to their residents.
    I would be remiss if we did not mention the additional social 
safety net provisions provided by the Federal Government. The increased 
funding for these programs that provide resources directly to our 
residents, such as unemployment insurance, child care services, and 
Temporary Assistance to Needy Families, is essential to our residents.
    On a final note, when the State government has been helpful in 
expediting and releasing funds, as in the case of the Workforce 
Investment Act's ARRA allocations, we have been very successful in 
moving ahead with projects. However, Honolulu has experienced delays 
with a number of road and traffic projects because of the Hawaii 
Department of Transportation's lengthy approval process. The City would 
appreciate the State government's timely assistance in approving our 
requests.
    On behalf of the Hawaii Council of Mayors, I thank you for 
providing this funding. We want to assure you that we are doing all we 
can to ensure the money is spent wisely and quickly to help our 
residents. We are available to answer any questions you may have about 
our programs and progress.
    Mahalo.

    Chairman Inouye. I will be submitting to you and to your 
fellow mayors, questions of minor technicality, but--I hope you 
can respond to those. In addition, I have a few that were not 
listed.
    I've been called upon, by telephone and otherwise, 
suggesting that we are once again experiencing an influx of 
homeless people from other States. You know, there was a time 
about 10 years ago when law enforcement officials on the west 
coast had been known to give some of their homeless an 
opportunity to go to Hawaii with a one-way ticket and not come 
back. Is there any truth to that at this point?
    Mr. Hannemann. You know, Mr. Chair, we hear about it 
anecdotally from time to time, that this is continuing to 
occur, but we have not been able to identify this particular 
example or examples in terms of, you know, being able to trace 
this back to an individual that is doing that.
    So, I know from the perspective of the city and county of 
Honolulu, that's always a rumor that it's out there, especially 
with people that may not be familiar with our lifestyle here or 
what to expect when they come here, but we haven't been able 
to--and I might say, too, we're not actually having a targeted 
effort to identify those folks.
    All we know is that you need to do something about it, 
certainly our priority is always looking at our local residents 
who are homeless. We're happy that the State has stepped up to 
work with the counties. We're working very closely with our 
social service providers, but this is going to be an ongoing 
problem, because every time we try to clean up our beach parks, 
for example--because that's the other major complaint that we 
get from our residents in all the counties, that our local 
residents want to use our beach parks, they want it to be 
available to everyone--any time we engage in a clean-up effort 
that may result in some of the homeless population being moved, 
we hear a couple of things. One, where do they go to? Second, 
who's going to help them?
    And so, the proper notification, working with social 
service providers, but most of all letting the homeless 
population know that there are options, there are places that 
they can go to is very important. And also, making sure that 
everybody understands, we all have to be part of the solution 
and not just part of the problem. It's one thing to complain 
about it, but we all have to step up and make sure that the 
whole homeless population is not situated on the leeward coast. 
Communities everywhere have to be able to accommodate them if 
they're congregating in those areas.
    So, it's an ongoing public education effort. The Federal 
funding that we are receiving from the Federal Government, 
especially in the area of ARRA, which is going to go to 
preventive homelessness, I think is going to go a long way 
toward addressing this problem.
    Chairman Inouye. One of the major concerns of Members of 
Congress has been the difficulty found in interoperability of 
information between the State, county, and Federal first 
responders and law enforcement personnel. We have seen 
situations where the State cannot communicate with the county 
police and vice versa, especially when we have some crisis 
situation, the situation is unacceptable. What is the situation 
there?
    Mr. Hannemann. I can speak from a county perspective of 
Oahu. When I came into office, Mr. Chair, that exactly was the 
case within our own county. We couldn't have--we didn't have 
the capabilities of the police being able to talk to the 
firefighters, the firefighters talking to the EMS folks, and 
the like.
    I have a very innovative and creative IT Director, Mr. 
Gordon Bruce, and we basically eliminated that problem. We have 
interoperability across the board at the county level. I 
believe there is going to still be some challenges in working 
with the State in that regard, but we're very hopeful because 
we can provide all that information or have that information, I 
say, to disseminate. But when there's a natural or man-made 
disaster, you have to have that across the board, from the Feds 
talking to the State, the State talking to county and vice 
versa. So, it's a work in progress but we think we can get 
there.
    Chairman Inouye. How's the interoperability between the 
counties?
    Mr. Hannemann. It's--well, we communicate through --through 
speech, through song, through dance.
    You name it, we're ready to go.
    The interoperability amongst the counties in the first is 
always very good. I'll say this, during the Felicia threat, 
Mayor Kenoi, and Mayor Tavares and I were constantly 
communicating, our staffs were constantly communicating, and it 
was very, very helpful because as you know, the threat was 
passing from one island to a different island, and this time 
Mayor Carvalho was spared, so he had a pass on this particular 
one. But interoperability was very helpful, and our staffs were 
very helpful to each other.
    As you may know, Mr. Chair, we have upgraded the Civil 
Defense Agency on Oahu. We've made it a full-fledged 
department, it's now a department of emergency management. We 
had an opportunity in one of your previous trips to take you 
down there, and our hope is to build a joint traffic management 
control center with Federal funding, there in the corner of the 
applied base yard, in back of the police department, that will 
serve as a one-stop center, if you will, for public safety and 
also enable us to better mitigate traffic throughout the city 
and county of Honolulu.
    Chairman Inouye. Will the stimulus funds be used to 
alleviate some of the problems caused by drugs?
    Mr. Hannemann. Yes.
    Chairman Inouye. Crystal meth?
    Mr. Hannemann. Yes.
    Chairman Inouye. Marijuana?
    Mr. Hannemann. Yes. There are funding opportunities in the 
ARRA, some of them are very touched upon, they're coming 
through our departments, working with social service providers. 
And that's always going to be an ongoing challenge. I've always 
said with drugs, we can't rest on our laurels, as much progress 
as we've made, certainly the ranking of Honolulu as one of the 
safest big cities in America. Once we become complacent and we 
become content, then those type of problems creep up again. So, 
the more proactive we can be, the more collaboration amongst 
the counties, the State, the nonprofit social service 
providers, the Federal agencies, the better off we're going to 
be.
    Chairman Inouye. I sometimes tell my constituents that when 
you look at the Honolulu--city and county of Honolulu Police 
Department, with uniformed personnel of about 2,000 for the 
whole island, the District of Columbia, I think, when you add 
Metropolitan Police, the POT police, the judiciary police, 
congressional police, you have over 8,000 in uniform, and I 
don't want to bring up the amount of crime rate, but we're 
doing pretty well.
    And I think you should be congratulated. And their 
population is one-half of yours.
    Mr. Hannemann. Thanks. Well, we're very proud of the 
efforts that have been made in the past. I mean, our motivation 
is to continue to build upon that and continue being one of the 
finest families.
    Chairman Inouye. My final question here is that I've been 
told that there's some concern about the procedures that have 
been set up by the Federal agencies on filing applications and 
all that, layer after layer?
    Mr. Hannemann. Well, there are some concerns with respect 
to guarding of information of the Federal Government, but Mayor 
Taveras and I are going to be part of the U.S. Conference of 
Mayors meeting coming soon where--the Obama administration will 
be there to address some of those concerns. I was on a 
conference call recently with Vice President Joe Biden in which 
a few mayors and I indicated to them that we'd be much more 
successful in implementing some of these programs if there were 
much more timely information, accessibility of information, and 
a timely response to some of our questions, and they've assured 
that that will occur.
    Chairman Inouye. I thank you very much, Mayor Hannemann, 
and I thank the mayors from the other islands--you've been very 
helpful. I presume you concur with the statement that----
    I've heard this happen before.
    Mr. Hannemann. They're great to work with, Mr. Chair. Thank 
you.
    Chairman Inouye. Thank you very much.
    Our next panel consists of the superintendent of the Hawaii 
Department of Education, Ms. Patricia Hamamoto, the Field 
Office Director of the Honolulu office of the U.S. Department 
of Housing and Urban Development, Mr. Gordan Furutani, and the 
communications director of the Hawaii Primary Care Association, 
Mr. Matthew A. Nagato.
    So, I'd like--if I may call upon the superintendent, the 
very distinguished Patricia Hamamoto.

STATEMENT OF PATRICIA HAMAMOTO, SUPERINTENDENT, HAWAII 
            DEPARTMENT OF EDUCATION
    Ms. Hamamoto. Good morning, Chairman Inouye.
    On behalf of the Hawaii State Department of Education, I 
extend my warmest aloha. We appreciate the opportunity to 
testify this morning on the impact of the ARRA Act of 2009, 
specific to Hawaii's economy and education.
    As you know, Hawaii's public school system is the 11th 
largest school district in the Nation, with over 177,000 
students enrolled in grades K through 12 at 254 noncharter, and 
31 charter, schools. The fiscal challenges we face today in 
public education are unprecedented. Hawaii's economy's downturn 
has resulted in K-12 education cuts, totaling over $500 million 
for school year's 2009-2010 and 2010-2011.
    With the Federal dollars provided by the Recovery Act, we 
are crafting a blueprint for meaningful, sustainable education 
reforms, and we will improve student learning, close the 
achievement gap, and set the foundation for Hawaii's long-term 
economic recovery.
    The first is the ARRA title I. As you know, we have both 
formula grants and the discretionary, and in our ARRA title I, 
there is approximately $32 million in addition to our regular 
title I allocation, or SEA--ESEA Act.
    The extended learning opportunities, the Recovery Act 
dollars have already made a substantial contribution in 
Hawaii's economy. This past summer, the department swiftly 
created an extended learning opportunity summer instructional 
program. We invested $5 million of ARRA title I funds to 
provide free instruction in English language arts and 
mathematics to economically disadvantaged student.
    Highly qualified teachers taught 9,000 students over a 3-
week period at 90 schools. Many of the participating schools 
did not meet annual yearly progress targets under the No Child 
Left Behind Act and our status, so this money was welcome in 
being able to provide the additional instructional help.
    Many of the--our ELO, our extended learning opportunities 
programs--assisted Hawaii's economy by employing nearly 500 
teachers, educational assistants and other school site 
personnel and by expending funds on instructional materials and 
supplies. The department intends to continue this offer after 
school, during inter-session, and next summer.
    In regard to the McKinney Vento Act, approximately $176,000 
was awarded and allocated. We currently will be setting up--
working with two shelters in the Oahani area, and that will 
provide outreach, tutorial, as well as instructional materials 
for the students.
    For ARRA IDEA, approximately $44 million was awarded to the 
State. Federal legislation allowed a one-time action to use 
IDEA Federal funds in place of State funds. By offsetting 
approximately $20 million in access, special education and 
related services for eligible students with ARRA individual and 
disabilities education act funds, the department was able to 
maintain staffing levels in schools, in comparison to school 
year 2008-2009.
    Salaries for 355 teachers were covered by the $20 million. 
Hawaii's remaining $20 million in IDEA funds will go toward 
education reform, and various professional development, teacher 
improvement and services to students, as well as additional 
programs.
    For ARRA title I, Hawaii received $348,600 in funds for 
equipment through the U.S. Department of Agriculture to support 
the National School Lunch Program. These funds have been 
awarded to 9 school food authorities, including 24 sites 
serving meals to children and adolescents on the 6 islands.
    The ARRA State stabilization funds--SFSF part A, which is 
approximately $154 million--both the University of Hawaii and 
the department of education will be drawing--the part A has yet 
to be released to the department or the university. At this 
time, the department and Governor Lingle are working to 
finalize a memorandum of understanding which will include the 
university. Once the MOU is signed, the department will receive 
its portion of the stimulus funds over the course of this 
fiscal year. Both the university and the department not only 
plan to draw down on the part A of the stabilization, to both 
offset our budget restrictions and reductions during this 
biennium. These actions will limit cuts to instructional 
programs and positions currently being reviewed.
    The ARRA State stabilization money, part B, which is 
approximately $35 million, the Governor has indicated in her 
application for the part B funds that it would be made 
available to support education. The Governor has invited the 
charter schools to apply for $24 million of the part B of SFSF 
funds. Once the application is approved, it is our 
understanding that the charter schools will submit expenditure 
reports and data directly to the Governor's Office for 
transmittal to the Federal Government.
    The department hopes the Governor will release an 
additional $10 million for the university, to develop a 
statewide longitudinal system, as well as any remaining funds 
that will allow the department to address K-12 education reform 
in the four assurance areas required by ARRA. As you know, 
Hawaii needs to deliver on the four assurances mandated by the 
act, and these are in the areas of professional development, 
and highly qualified teachers, a common core of State 
standards, working with the university on a longitudinal data 
system, and other efforts outlined in my testimony. By meeting 
these assurances, Hawaii will be in a better position to apply 
for the Race To the Top funding.
    In closing, the American Recovery and Reinvestment Act of 
2009 is a crucial investment in the future of our children, 
tomorrow's workforce and our economy. I thank the committee for 
this opportunity, thank you, Chair, for this opportunity to 
offer my comments, and our full remarks will be entered into 
the record.
    Thank you.
    [The statement follows:]

                Prepared Statement of Patricia Hamamoto

    Chairman Inouye and Members of the Senate Appropriations Committee: 
On behalf of the Hawaii State Department of Education, I extend my 
warmest aloha. We appreciate the opportunity to testify this morning on 
the impact of the American Recovery and Reinvestment Act of 2009 
(``Recovery Act,'' or ``ARRA'') on Hawaii's economy.
    Hawaii's public school system is the 11th largest school district 
in the Nation with over 177,000 students enrolled in grades K-12 at 254 
non-charter and 31 charter schools. Our statewide school system serves 
both as the State Education Agency and the Local Education Agency.
    The fiscal challenges we face today in public education are 
unprecedented. In response to the global financial crisis, States 
across the Nation have been forced to slash millions of dollars from 
their education budgets.
    Hawaii's economic downturn has resulted in cuts for non-charter and 
charter schools totaling over $500 million for school years 2009-2010 
and 2010-2011. With the Federal dollars provided by the Recovery Act, 
we have strategically addressed our budget reductions by streamlining 
centralized operations and programs while crafting our blueprint for 
phasing-in meaningful, sustainable education reform that will improve 
student learning and close the achievement gap.
    Transforming public schools and universities into 21st century 
institutions of learning that graduate college- and career-ready young 
men and women is no longer a goal; it is a mandate. The foundation for 
Hawaii's long-term economic recovery and future ultimately rests on 
this mandate.

                       ARRA AND HAWAII'S ECONOMY

    Hawaii's economy is being aided by the Recovery Act funds through 
our education support and economic stabilization efforts.
    Support to Struggling Schools and Students.--Each year, tuition-
based summer school programs for credit recovery are usually offered by 
only 45 schools statewide. Some schools opt to provide a non-
traditional summer program for their enrolled students focused on 
preparatory or grade-level coursework.
    Over the Fiscal Biennium 2009-11, Hawaii's annual Title I 
allocation was increased by $34 million in ARRA Title I funds. The 
Department swiftly created an Extended Learning Opportunities (ELO) 
Summer Instructional Program and invested $5 million to provide free 
instruction in English language arts and mathematics to economically 
disadvantaged students. Highly Qualified teachers taught 9,000 students 
over a 3-week period this past summer at 90 schools. Recent test 
results indicate that many ELO-participating schools did not meet 
Annual Yearly Progress targets under the No Child Left Behind (NCLB) 
Act and are in ``status.''
    Ten-month employees such as teachers and educational assistants are 
salaried personnel who are not compensated over the summer months. 
Thus, ELO programs assisted Hawaii's economy by employing nearly 500 
teachers, educational assistants, and other school site personnel, and 
by expending funds on instructional materials and supplies. The 
Department intends to offer ELO after school, during intersession, and 
next summer.
    Stabilize Education Funding.--By offsetting $19.9 million in excess 
special education and related services for eligible students with ARRA 
Individuals with Disabilities Education Act (IDEA) funds, the 
Department was able to maintain staffing levels in school year 2008-
2009. Federal legislation allowed this ``one-time'' action to use 
Federal funds in place of State funds. Salaries for 355 teachers were 
covered by the $19.9 million. Hawaii's remaining $20 million in IDEA 
funds will go towards education reform.
    Equipment for School Lunch Programs.--Hawaii received $348,600 in 
ARRA Title I funds for equipment through the U.S. Department of 
Agriculture in support of the National School Lunch Program. These 
funds have been awarded to nine School Food Authorities, including 24 
sites serving meals to children and adolescents on six islands.

                       STATE FISCAL STABILIZATION

    Federal stimulus monies have stabilized the level of funding for 
public education during the current economic downturn. ARRA State 
Fiscal Stabilization Funds (SFSF) have enabled the Hawaii State 
Department of Education and the University of Hawaii to preserve 
instructional programs.
    Hawaii State Department of Education: Part A SFSF.--The Department 
will draw on Part A SFSF totaling $53 million per year for Fiscal 
Biennium 2009-11 to offset the $43 million per year budget reduction 
taken by the 2009 Hawaii State Legislature and to meet the additional 
14 percent in budgetary restrictions imposed by Governor Linda Lingle 
on the Department in July 2009. Without the Part A SFSF, our non-
charter public schools stood to lose approximately 765 teachers with an 
average salary of $56,257. Charter schools will receive $2 million for 
each year of the biennium.
    The Part A SFSF has yet to be released to the Department. At this 
time, the Department and Governor Lingle are working to finalize a 
Memorandum of Understanding (MOU). Once the MOU is signed, the 
Department will receive its portion of the stimulus funds over the 
course of the fiscal year.
    University of Hawaii: Part A SFSF.--Part A SFSF of $22 million per 
year for Fiscal Biennium 2009-11 will be used to help mitigate the $46 
million per year budget reduction by the Hawaii State Legislature and 
the $52 and $54 million reductions in fiscal year 2010 and fiscal year 
2011, respectively, imposed by the Governor, which reflects the 
equivalent of 3 furlough days per month for faculty and staff. The 
University will use the Part A SFSF balance for faculty salaries 
related to classroom and laboratory instruction.
    The $22 million in Part A SFSF, when released, will help preserve 
instructional faculty positions and courses that would otherwise have 
to be eliminated. The University's financial situation becomes more 
critical as enrollments have increased at all campuses, statewide. 
Student enrollment at the three University campuses and seven community 
colleges are up by 5,830, or 13.2 percent, and 4,178, or 16.5 percent, 
respectively. More students are applying for Federal financial aid and 
the increase in the Pell Grant provided by ARRA will ensure that more 
needy students have access to higher education even during the economic 
downturn.
    Hawaii State Department of Education and University of Hawaii Part 
B SFSF.--Governor Lingle indicated in her application for the Part B 
SFSF that funds would be made available to support education. Charter 
schools have applied directly to the Governor for $24 million of the 
Part B SFSF. If the application is approved, charter schools will 
submit expenditure reports and data to the Governor's office. The 
Department hopes the Governor will release an additional $10 million 
for the University to develop a statewide longitudinal system as well 
as any remaining funds that will allow the Department to address K-12 
education reform and the four assurance areas required by ARRA.

                            EDUCATION REFORM

    Essential education reform in Hawaii's public schools will be 
driven by best practices and the promotion of effective strategies. A 
combination of ARRA funds--a sum total of approximately $45 million--
will be spent on supporting reform and innovation to increase student 
achievement. Charter schools will receive their ARRA Title I and IDEA 
funds based on the current approved funding methodology.

               EFFECTIVE EDUCATORS AND ACADEMIC STANDARDS

    Equitable Distribution of Effective Educators.--Hawaii spends State 
and Federal dollars (NCLB Title II, Part A) on its U.S. Department of 
Education-approved Highly Qualified State Plan (HQSP) and Equity Plan 
(EQP) programs designed to deliver instruction by highly qualified and 
experienced teachers to all students in schools led by effective 
leaders.
    High Needs schools with large numbers of economically disadvantaged 
students, poor academic performance, and higher percentages of core 
courses taught by non-Highly Qualified Teachers are given priority 
status for funds allocated by the Department.
    This school year, a select cohort group of teachers and school 
administrators will benefit from an additional year of professional 
training in struggling schools and field-based experiences focused on 
applied instructional leadership. This winning plan affords the 
candidates relevant and meaningful field work. Immediate benefits 
accrue to struggling schools that receive additional leadership and 
support. Costs for this program will be assessed to Federal NCLB 
project funds.
    By leveraging available funding sources with ARRA funds (IDEA and 
Title I), the Department will achieve ARRA reform goals and expand 
professional development for teachers and principals. All future 
professional development courses and training will be based on student 
achievement and focused on student needs identified under HQSP and EQP 
programs.
    Raising Academic Standards and Improving Student Assessments.--
Hawaii is participating in a program led by the States to develop a 
common core of State standards that are internationally benchmarked. 
The national effort is being led by the Council of Chief State School 
Officers and the National Governors Association Center for Best 
Practices. Joining this project will help Hawaii meet the assurance on 
standards outlined in ARRA. The State's involvement in this effort may 
also allow Hawaii to pursue additional Federal and private funds to 
raise academic standards and to jointly work with other States to 
improve student assessments.
    Hawaii is the newest member of the World-Class Instructional Design 
and Assessment Consortium. This group of 20 partner States is dedicated 
to the design and implementation of high standards and equitable 
educational opportunities for English language learners. ARRA funds 
will pay for consortium membership fees that will cover the 
administration of English-language proficiency test assessments aligned 
to Hawaii's academic content standards for 18,000 students per year.

                    IMPROVED DATA COLLECTION AND USE

    University of Hawaii Part B SFSF. As noted earlier, Governor Lingle 
indicated in her application for the Part B SFSF that funds would be 
made available to support education. With $10 million in funds, the 
University would be able to develop a statewide longitudinal data 
system to meet Federal ARRA assurances regarding improvement and use of 
inter-agency data for education planning. Additionally, these funds may 
be directed as additional resources for science, technology, 
engineering, and math (STEM) programs.
    Accepting Part A and Part B SFSF required the Governor to assure 
the State's commitment to improving the collection and use of 
longitudinal student data. This assurance will accelerate ongoing 
efforts of the Department and the University; Hawaii P-20 Partnerships 
for Education; State of Hawaii Department of Business, Economic 
Development and Tourism; Department of Labor and Industrial Relations, 
and others to develop a statewide longitudinal system.
    A statewide longitudinal data system will track students' 
participation and progress in educational programs from early childhood 
through higher education and into the workforce. Better data and 
analyses will improve decision-making and educational outcomes for 
education and workforce development.
    Hawaii State Department of Education: ARRA Title II, Part D 
Education Technology.--The Department is expending $3.2 million of ARRA 
funds (Title II, Part D Education Technology funds, Title I, and IDEA) 
to fast-track the development and implementation of its Data for School 
Improvement Project. This critical project will help struggling schools 
use student performance data to improve classroom instruction and 
student achievement.
    Starting next school year, teachers will be able to regularly 
assess student performance on taught English language arts and 
mathematics benchmarks. Access to these results will be instrumental in 
providing timely and appropriate instructional interventions and 
support to those students needing additional assistance.

                 OTHER SUPPORTS FOR STRUGGLING SCHOOLS

    The Department is committed to closing the achievement gap through 
the creation of coordinated and sustainable projects.
    McKinney Vento Act.--The Department will partner with selected 
homeless shelters. Content specialists will evaluate and determine 
appropriate English language arts and mathematics curriculum for 
instructional delivery at the shelters. Computer instruction will also 
be offered. This project will provide tutoring to struggling students 
who are eligible for free and reduced lunch, attend selected Title I 
schools, and live in homeless shelters. Funding is being provided 
through the Education for Homeless Children and Youth, Recovery Act.
    More Extended Learning Opportunities (ELO).--ELO will be offered 
after school, during intersession, and next summer. The ELO program 
will be sustained reallocating Title I funds (beginning school year 
2012-13) and augmented by a waiver allowing the Department to provide 
Supplemental Education Services (SES).
    Framework for School Turnaround Partnership for School 
Improvement.--The school turnaround project will focus on strengthening 
Hawaii's public school system by developing a process for effective 
leadership and building internal capacity. ARRA Title I monies will 
fund this project.
    Professional Development on Education Reform.--ARRA Title I and 
IDEA funds will fund professional development focused on research-based 
classroom practices and education reform initiatives to improve student 
achievement.

                                CLOSING

    The American Recovery and Reinvestment Act of 2009 is a crucial 
investment in the future of our children, tomorrow's workforce, and our 
economy. I thank the Committee for this opportunity to offer my 
comments.

    Chairman Inouye. I thank you very much, Madam 
Superintendent.
    Most people are not aware of the unique problems and 
challenges faced by your department as compared to other 
States. For example, we have more demand for language 
specialists, because our population is made up of a more 
diverse ethnic spread. You don't find that elsewhere.
    Second, we have laws like the Felix laws that we must care 
for children, students with special physical problems which you 
don't find in other States. We're required, by law, to do so. 
These are just two examples that I've cited. And the fact that 
our school system is such that we have several islands, not 
just one island--not one large land mass.
    So, notwithstanding, you've done very well, Ms. Hamamoto.
    Ms. Hamamoto. Thank you, sir.
    Chairman Inouye. And will the stimulus funds make up for a 
shortfall that you are experiencing now? You've said that as a 
result of the economic downturn, your budget has been cut by 
about $500 million?
    Ms. Hamamoto. Yes.
    Chairman Inouye. Will the stimulus funds make up for it?
    Ms. Hamamoto. No, it will not. It will help, I think, in 
the area of the funds that have been targeted for title I and 
IDEA, which are special needs students, it would help there, 
but overall, the department's budget has been severely impacted 
by the budget reductions and restrictions, beginning 2 years 
ago when we've had to make allowances and reductions for each 
year--each fiscal year.
    So, opening this school year, we're approximately $80 
million short when we started school 2 weeks ago, and that will 
continue as we progress, given the restrictions that we 
currently are--the restrictions we've currently been given--
given--well, the Governor has already explained, and others 
have explained the current challenges both in the intake of 
revenue, and that has affected us, as well, in relationship to 
the dollar amount that the department will be experiencing over 
the next couple of years as we mentioned. What we've already 
taken, what we're currently taking, and what we'll have to 
take, it will be nearly $500 million.
    Chairman Inouye. According to some of the headlines and 
articles appearing in the local press, one might get the 
impression that your department and the Governor's Office are 
not singing the same song.
    Ms. Hamamoto. Well, maybe they're different tones.
    Chairman Inouye. Are you able to resolve your differences?
    Ms. Hamamoto. In relationship to what is expected for the 
ARRA funds and the challenges that are there, I believe, yes, 
we are, sir.
    I also know that it's been very difficult--education is 
definitely not being spared--and while we feel that we have to 
provide for the children, by law, they're by law required to 
come to us, we have 177,000 children that we must take care of, 
and as you mentioned, we have the ELL, the English second-
language learner--very diverse, as well as those with 
challenges both emotionally, socially and physically, and that 
creates another set of challenges and struggles for the 
department.
    But nevertheless, come Monday morning, this morning, our 
children were there at the door, and they expect to be taught, 
and we expect our teachers and our administrators to deliver 
services so that they can be prepared for the 21st century.
    Chairman Inouye. Are you satisfied that your department is 
doing whatever can be done for the children from disadvantaged 
economic families? The homeless?
    Ms. Hamamoto. No, I am not satisfied. I want to see the 
ability to provide not only more in the way of direct services 
for students, I'd like to have more highly qualified teachers, 
I'd like to be able to place the best teachers in the areas 
that need the most services and provide that social equity--and 
education can level the playing field, and that's what I would 
like to be able to do with the ARRA funds.
    And we're going to do our darndest to start to use the 
funds to leverage the equity piece and move the very best 
teachers to where they're most needed by our children.
    Chairman Inouye. Are you satisfied that you're hiring the 
best teachers?
    Ms. Hamamoto. No, I'm not, sir. I think we can--well, you 
know, you mentioned that the State of Hawaii has unique 
challenges because we're an island State. It's also a unique 
challenge in that it's very difficult at times time to recruit 
from the mainland. And after 9/11, we found that many of our 
mainland teachers left after a couple of years, wanting to be 
closer to family, and we can understand that.
    So, our recruitment becomes much more difficult. We know 
that the university and our local colleges provide less than 50 
percent of all of the new teachers we hire, which means that 
we're forced to go out of State to do the recruitment. And yet, 
the relocation, the cost of living here, and the distance, at 
times, works against us, although we may be paradise, there is 
a price to pay.
    So, we work within the system, and we work within the State 
to beef up our--or, I should say, rather than beef up--what we 
do is we work with the universities and colleges to strengthen 
their teacher education program, so that they'll be ready to 
provide the services for our children. But that's not enough, 
we really need a lot more teachers in relationship to wanting 
to have that commitment and that attitude that they're going to 
do the very, very best for our children, and they're going to 
have the highest standard for our children to achieve.
    Chairman Inouye. Considering the high cost of living, is 
the pay scale for schoolteachers comparatively as good as, say, 
Washington or Oregon?
    Ms. Hamamoto. When you compare the cost of living and the 
distance, many of our new teachers have a very difficult time, 
and for many of those that are in-State, fortunately they have 
family that helps take care of them, but we find that most of 
our teachers that come, if there is not a network of support, 
it becomes difficult for them to own a home, to provide 
transportation and the necessities that they need.
    Chairman Inouye. I thank you very much.
    Ms. Hamamoto. Thank you.
    Chairman Inouye. You've got a difficult job, but I admire 
what you're doing.
    Ms. Hamamoto. The product is worth it in the end, our 
students.
    Chairman Inouye. Our next witness is the Field Office 
Director of the Honolulu office of the Department of Housing 
and Urban Development, Mr. Gordan Furutani.

STATEMENT OF GORDAN Y. FURUTANI, FIELD OFFICE DIRECTOR, 
            HONOLULU OFFICE, U.S. DEPARTMENT OF HOUSING 
            AND URBAN DEVELOPMENT
    Mr. Furutani. I'm Gordan Furutani, Field Office Director 
for the U.S. Department of Housing and Urban Development.
    First, I want to thank the committee for inviting HUD to 
this hearing, and also for the opportunity to provide a report 
on the status of HUD programs that have been funded by the 
Recovery Act.
    Before I do that, however, I'd like to introduce you to a 
couple of my staff that have been working diligently to 
implement--fully implement--the act.
    First of all, Mike Flores--Mike is the Director of Public 
and Indian Housing, and Mark Chandler--Mark is the Director of 
Community Planning and Development.
    Now, the Recovery Act provided HUD with a total of $13.6 
billion. Of this amount, grantees in the State of Hawaii would 
receive $52.6 million in formula funding.
    Six HUD programs were funded under this act. The programs--
the funded amount, the obligation and expenditure status for 
each program are as follows: The Hawaii Public Housing 
Authority was awarded more than $16.2 million under the Public 
Housing Capital Fund Program, and the housing authority has 
selected 10 projects to be funded. One of the projects has 
already been placed under contract, and the authority is in the 
process of completing the contracts for the other projects.
    Thus far, the authority has obligated about $1.1 million, 
or about 7 percent of its total award.
    Funding under the Native Hawaiian housing block grant is 
$10.2 million. The grant has been awarded to the State 
department of Hawaiian homelands, and the department of 
Hawaiian homelands will use 100 percent of the funds for 
infrastructure development of two affordable housing projects. 
Already, $1.7 million has been obligated, and about $700,000 or 
7 percent of the total funds have already been spent.
    Hawaii also received about $9.8 million for the Tax Credit 
Assistance Program, or TCAP, and these funds have been awarded 
to the State Housing Finance and Development Corporation. The 
State has selected three projects to fund and is in the process 
of completing the contracts with the developers.
    Six point one million dollars has been funded under the 
Homeless Prevention and Rapid Re-Housing Program. Of this 
amount, $2.1 million has been awarded to the State for 
distribution to the counties, and another $4 million has been 
awarded to the city. Currently, the grantees are in the process 
of providing access to nonprofit service providers through sub-
recipient agreements.
    Under the project-based rental assistance program, $6.1 
million have been awarded to 21 HUD-assisted multifamily rental 
housing developments, and all of the funds have been made 
available to the property owners, and already $3.9 million, or 
64 percent of the funds have been expended.
    Last, under the Community Development Block Grant Program, 
a total of $4 million have been awarded, refer to the mayor for 
how much they enjoyed or loved this Community Development Block 
Grant Program. Two point six million has been awarded to the 
city, $650,000 to the county of Hawaii, $550,000 to the county 
of Maui, and $200,000 to Kauai County. The grantees are 
presently in the process of developing agreements with the 
nonprofit service providers to access and expend these funds.
    In addition to the funds provided by formula, which I just 
covered, Hawaii's eligible to compete for three Recovery Act 
competitive grant funds, including $995 million in the Public 
Housing Capital Fund Program, $2 billion under the Neighborhood 
Stabilization Fund, and $250 million under the Green Retrofit 
Program for HUD-assisted multifamily projects.
    And more detailed information on the program description, 
obligation and expenditure deadlines, accounting of projects to 
be funded, breakdown of the funding amounts for each project, 
and specific amounts obligated and spent is contained in our 
written testimony.
    Finally, I would like to share with you our assessment 
regarding use of the Recovery Act funds. We feel that we are 
presently in a good position, and our program directors feel 
optimistic about getting the job done, and fully expect that 
100 percent of the funds will be obligated and expended by the 
prescribed deadlines, or very close to the deadlines.
    That's why I introduced my program staff, we all 
collaborated on deciding where we were with regard to the 
processing of the Recovery Act funds, and we all decided that 
we are in a good position to meet all of the deadlines.
    Mr. Chairman, this concludes my testimony, and again, thank 
you and the committee for allowing us to participate in this 
hearing.
    [The statement follows:]

                 Prepared Statement of Gordan Furutani

    Aloha, Senator Inouye and members of the Committee. I am Gordan 
Furutani, Honolulu Field Office Director of the Department of Housing 
and Urban Development (HUD). Thank you for inviting HUD to participate 
in this hearing and for the opportunity to inform you about the HUD 
program activities under the American Recovery and Reinvestment Act 
(ARRA) of 2009. Thank you for funding the programs that will benefit 
the people of the State of Hawaii.
    ARRA included $13.61 billion for projects and programs administered 
by HUD, nearly 75 percent of which was allocated to State and local 
recipients on February 25, 2009--only 8 days after President Obama 
signed ARRA into law. Recovery Act investments in HUD programs will be 
not just swift, but also effective: they will generate tens of 
thousands of jobs, modernize homes to make them energy efficient, and 
help the families and communities hardest hit by the economic crisis. 
The remaining 25 percent of funds are being awarded via competition in 
the coming months.
    Of the HUD funds awarded by formula or direct project funding, 
grantees in the State of Hawaii will receive $52,649,563. The six 
programs that received funding by formula or direct project funding, 
the amount of funds for each of the programs, and the distribution of 
the funds are as follows:
Public Housing Capital Fund--$16,245,443
    The Capital Fund has been awarded to the Hawaii Public Housing 
Authority (HPHA) and made available on 3/17/09.
    100 percent of the funds (signed contracts) must be obligated by 3/
17/10 and 60 percent of the funds must be expended by 3/17/11 and 100 
percent by 3/17/12.
    HPHA has selected 10 projects to be funded that will utilize 100 
percent of the funds. One project has been placed under contract and 
HPHA is in the process of preparing documents to procure the other 
contracts.
    As of 8/12/09, HPHA has obligated $1,170,000 (7.2 percent) of the 
funds.
    We expect that 100 percent of the funds will be obligated and 
expended by the deadlines.
Native Hawaiian Housing Block Grant--$10,200,000
    The NHHBG has been awarded to the Department of Hawaiian Home Lands 
(DHHL) and made available on 5/7/09.
    100 percent of the funds must be obligated (signed contracts) by 5/
6/10 and 50 percent of the funds must be expended by 5/6/11 and 100 
percent by 5/6/12.
    DHHL has selected two projects to be funded that will utilize 100 
percent of the funds.
    As of 8/6/09, $1,727,607 (17 percent) has been obligated and, as of 
8/1/09, $700,396 (7 percent) has been expended.
    We expect that 100 percent of the funds will be obligated and 
expended by the deadlines.
Tax Credit Assistance Program--$9,861,610
    The TCAP has been awarded to the State of Hawaii, Hawaii Housing 
Finance and Development Corporation (HHFDC).
    75 percent of the funds must be obligated (signed contracts) by 2/
16/10 and 75 percent of the funds must be expended by 2/16/11 and 100 
percent by 2/16/12.
    The grantee's application was approved and the grant agreement has 
been executed by HUD.
    HHFDC has selected three projects to be funded that will utilize 
100 percent of the funds and is in the process of contracting with the 
developers.
    We expect that 100 percent of the funds will be obligated and 
expended by the deadlines.
Homeless Prevention and Rapid Re-housing Program--$6,182,962
    The HPRP has been awarded to the State of Hawaii (for the neighbor 
island counties)--$2,166,888 and to the City and County of Honolulu--
$4,016,074.
    100 percent of the funds must be obligated (signed subrecipient 
agreements) by 9/30/09 and 60 percent must be expended within 2 years 
and 100 percent within 3 years.
    All grantee applications to HUD for Hawaii have been approved and 
the grant agreements have been executed by HUD.
    Grantees are in the process of executing the grant agreements and 
in the process of developing subrecipient agreements with the nonprofit 
service provider.
    We expect that 100 percent of the funds will be obligated and 
expended by the deadlines.
Project-Based Rental Assistance--$6,117,358
    The PBRA has been awarded to 21 HUD-assisted multifamily housing 
developments.
    All funds were reserved 3/20/09 and obligated (made available to 
the property owners) by 6/16/09.
    As of 8/13/09, $3,942,656 (64 percent) has been expended.
    All funds will be expended as this program provides the monthly 
subsidy of the tenants' rents that the owners needs to cover project 
operations.
Community Development Block Grant--$4,042,190
    The CDBG has been awarded to the City and County of Honolulu--
$2,626,694; Hawaii County--$647,364; Maui County--$552,976; Kauai 
County--$215,156.
    100 percent of the funds must be expended by 9/30/12.
    All of the applications from the grantees have been approved by HUD 
and the grant agreements have been issued.
    Grantees are in the process of executing the agreements and 
returning to HUD for final processing.
    Grantees are in the process of developing subrecipient agreements 
between the grantee and the nonprofit service provider.
    The City and County of Honolulu has selected seven projects to be 
funded; Hawaii County has selected two projects; Kauai County has 
selected two projects; and Maui County has selected two projects.
    We expect that 100 percent of the funds will be expended by the 
deadline.
    ARRA set a strict timetable for obligating and expending the ARRA 
funds. Appendix A provides a Table identifying the specific projects or 
recipients of the ARRA funding as well as the statutory deadlines for 
obligating and expending the funds. I assure you that the recipients of 
the funds and our staff are working diligently to fully utilize the 
ARRA funds and we expect that, for each program, we will not fail to 
meet the deadlines for obligations and expenditures. HUD is equally 
committed to ensuring that these programs, and all Federal housing 
programs, are administered in a way that affirmatively promotes fair 
housing and equal housing opportunity in Hawaii and across the nation 
so that all Americans have access to decent, safe and affordable 
housing.
    In addition to the ARRA funds provided by formula or direct project 
funding, Hawaii is eligible to compete for the three ARRA competitive 
grant programs:
  --Public Housing Capital Fund.--The Hawaii Public Housing Authority 
        is eligible to compete for a portion of the $995 million made 
        available under this program.
  --Neighborhood Stabilization Program.--The eligible grantees are able 
        to compete for a portion of the $2 billion available under this 
        program.
  --Green Retrofit Program for Multifamily Housing.--The eligible 
        property owners are able to compete for a portion of the $250 
        million available under this program.
    The individual Notices of Funding Availability for each of the 
competitive programs have been issued and applications from prospective 
grantees have and are being received. Awards for the Public Housing 
Capital Fund must be made by September 30, 2009. Decisions on the other 
competitive grants are expected to be made in the next few months.
    See Appendix B for a brief description of the ARRA programs 
applicable to Hawaii.
    One challenge faced by the recipients of the ARRA funds is in 
procurement. The ARRA funds are in addition to funds that grantees 
already received as part of their regular annual funding. The good news 
is that the number of projects that could be funded to help stimulate 
the economy increased, but the number of contracts that had to be let 
in a short period of time increased as well. The strict deadlines 
imposed by ARRA on the obligation and expenditure of funds are taxing 
the staff of the grantees to be able to do more procurement with the 
same amount of staff resources. Although ARRA provided up front waivers 
from local procurement requirements and encouraged grantees to select 
projects that were shovel-ready, the process of securing the contracts 
(obligation) and completing the work (expenditures) takes time.
    Another challenge is determining if the materials bought with ARRA 
funds all meet the Buy American provision. For example, one grantee 
found that it is not a safe-harbor to simply buy windows from a local 
window supplier and be confident that the purchase satisfies the Buy 
American requirement. They or the contractors must delve deeper to 
determine that the raw material and parts that went into the 
construction of the windows are from American manufacturers in order to 
meet the requirements of ARRA. The time and effort in searching for 
materials, equipment, etc. that meets the Buy American requirement, 
whether done by the grantees or by the contractors, will slow the 
contracting and acquisition processes, may increase costs, and may 
deter contractors and material suppliers from participating in the 
project.
    Thank you again for the opportunity to provide information about 
the HUD ARRA funded activities and for your support of the programs 
that will benefit the people of Hawaii.

                      APPENDIX A--HUD FUNDING FOR HAWAII--AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009--ENACTED FEBRUARY 17, 2009
                                                                 [As of August 14, 2009]
--------------------------------------------------------------------------------------------------------------------------------------------------------
  Program--formula funded and
    direct project funding           Funding amount        Obligation deadline     Spending deadline            Obligated                Expended
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Housing Capital Fund...  $16,245,443.............  100 percent by 3/17/   60 percent by 3/17/11  $1,170,000 as of 8/12/09  ......................
    Projects to be funded:                                 10.                   100 percent by 3/17/
     David Malo Circle,                                                           12
      Lahaina, Maui: roofing,
      site improvements, ADA
      work, misc repairs--
      $600,000 estimated.
        Hale Hauoli, Honokaa,
         Hawaii: roofing, site
         improvements, ADA
         work, painting,
         interior repairs--
         $2,800,000 est.
        Kaimalino, Kealakehe,
         Hawaii: roofing, site
         improvements,
         flooring repairs,
         misc repairs--
         $1,831,483 est.
        Kahekili Terrace,
         Wailuku, Maui:
         Replace hot water
         storage, roofing,
         exterior painting,
         plumbing, electrical
         and related work,
         asbestos mitigation--
         $3,448,000 est.
        Kalihi Valley Homes,
         Honolulu, Oahu:
         Interior and exterior
         renovation, roofing,
         kitchen improvements,
         plumbing and
         electrical upgrades,
         painting--$1,170,000
        Kalanihuia, Honolulu,
         Oahu: roof repair for
         elevator shaft and
         lobby--$340,000 est.
        Makua Alii, Honolulu,
         Oahu: Structural and
         spalling concrete
         repairs--$1,734,587
         est.
        Makani Kai Hale I and
         II, Wailuku, Maui:
         replace exterior
         siding, windows,
         doors, screens and
         frames, roofing,
         gutters and
         downspouts,
         electrical repairs--
         $2,200,000
        Mayor Wright Homes,
         Honolulu, Oahu:
         roofing--$1,000,000
         est.
        Various Projects and
         Locations: repair
         long term vacant
         units, misc repairs
         and upgrades--
         $1,000,000
Native Hawaiian Housing Block   $10,200,000.............  100 percent by 5/6/10  50 percent by 5/6/11   $1,727,607 as of 8/6/09   $700,395.68 as of 8/1/
 Grant.                                                                          100 percent by 5/6/12                             09
    Projects to be funded:
        Infrastructure
         development for
         Kaupuni Village--
         $1,700,000
        Infrastructure
         development for East
         Kapolei II--
         $8,500,000
Tax Credit Assistance Program.  $9,861,610..............  75 percent by 2/16/10  75 percent by 2/16/11  ........................  ......................
    Projects to be funded:                                                       100 percent by 2/16/
                                                                                  12
        Ainakea Senior
         Residence, 30 units,
         Hawaii Community
         Builders, Hawaii
         County--$3,300,000
        Hale Wai Vista, 84
         units, Hawaii Housing
         Development
         Corporation, Honolulu
         County--$1,780,000
        Kukui Gardens, 389
         units, EAH, Inc. and
         Devine & Gong, City
         and County of
         Honolulu--$4,781,610
Homelessness Prevention and     $6,182,962..............  100 percent by 9/30/   60 percent w/in 2      ........................  ......................
 Rapid Re-housing Program.        State of Hawaii--        09.                    years.
    Projects to be funded--      $2,166,888                                      100 percent w/in 3
 State of Hawaii:                 HNL--$4,016,074                                 years.
     Office of Social
      Ministry, Hawaii County--
      $707,850
     Kauai Economic
      Opportunity, Kauai
      County--$341,425
        YWCA of Kauai, Kauai
         County--$141,425
        Family Life Center,
         Maui County--$300,000
        Maui Economic Concerns
         of the Community,
         Maui County--$135,950
        Maui Economic
         Opportunity, Maui
         County--$135,950
        Women Helping Women,
         Maui County--$135,950
        Legal Aid Society of
         Hawaii, Multi-County--
         $112,500
        Maui Aids Foundation,
         Maui County, $112,500
        Hawaii Public Housing
         Authority, State of
         Hawaii--$43,338
    Projects to be funded--
     City and County of
     Honolulu:
        Catholic Charities
         Hawaii--$973,432
        Helping Hands Hawaii--
         $500,000
        Institute for Human
         Services, Inc.--
         $1,100,000
        Kalihi Palama Health
         Center--$500,000
        Legal Aid Society of
         Hawaii--$300,000
        Volunteer Legal
         Services Hawaii--
         $100,000
        Waianae Coast
         Comprehensive Health
         Center--$219,840
        Waikiki Health Center--
         $180,000
        City and County of
         Honolulu
         Administration of
         HPRP and HMIS--
         $142,802
Project-Based Rental            $6,117,358..............  NA...................  NA...................  $6,117,358 as of 6/30/09  $3,942,656 as of 8/13/
 Assistance.                                                                                                                       09
    Projects to be funded:
        Home Pumehana,
         Molokai--$143,835
        River Pauahi, Oahu--
         $190,109
        Kapuna I, Oahu--
         $574,770
        Waipahu Hall, Oahu--
         $250,190
        Kekaha Plantation,
         Kauai--$232,016
        Kaneohe Elderly, Oahu--
         $113,372
        Maunakea Tower, Oahu--
         $848,827
        Hale Hoaloha, Hawaii--
         $185,136
        Kalani Garden
         Apartments, Oahu--
         $48,258
        Kulana Nani, Oahu--
         $37,901
        Malulani Hale, Oahu--
         $15,057
        Keola Hoonanea, Oahu--
         $48,069
        Hale Lahaina, Maui--
         $23,376
        Wilikina Apartments,
         Oahu--$331,734
        Smith-Beretania, Oahu--
         $2,055,430
        Waipahu Tower, Oahu--
         $799,656
        Residential Services
         HARC II, Oahu--
         $22,074
        Mana Ola Na Keanuenue,
         Maui--$47,840
        Hale O Mana O Lana
         Hou, Maui--$40,573
        Helemano Plantation,
         Oahu--$78,351
        Residential Services
         HARC IV, Oahu--
         $30,784
Community Development Block     Total--$4,042,190.......  NA...................  100 percent by 9/30/   ........................  ......................
 Grant.                           HNL--$2,626,694                                 12.
    Projects to be funded:        HI County--$647,364
     Hospice of Hilo, Hawaii      Maui County--$552,976
      County--$367,628            Kauai County--$215,156
     Kamuela Elderly Housing,
      Hawaii County--$215,000
     County of Hawaii
      Administration and
      Planning--$64,736
        Maui Food Bank, Maui
         County--$300,000
        Easter Seals, Maui
         County--$252,976
        Kauai Head Start,
         Kauai County--$16,300
        Kapaa Infrastructure,
         Kauai County--
         $198,856
        Kokua Kalihi Valley--
         City and County of
         Honolulu--$800,000
        Waianae Coast
         Comprehensive Health
         Center--City and
         County of Honolulu--
         $732,817
        Gregory House
         Programs, City and
         County of Honolulu--
         $298,333
        Alternative Structures
         International, Ohana
         Ola O Kahumana, City
         and County of
         Honolulu--$265,875
        Hawaii Family Law
         Clinic, City and
         County of Honolulu--
         $137,000
        Legal Aid Society of
         Hawaii, City and
         County of Honolulu--
         $100,000
        Central Oahu Youth
         Services Association,
         City and County of
         Honolulu--$30,000
        City and County of
         Honolulu
         Administration and
         Planning--$262,669
Total Formula Funding for
 Hawaii = $52,649,563
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
         Program--competitive                Funding amount            Obligation deadline             Spending deadline         Obligated     Expended
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Housing Capital Fund...........  Competition--$1 billion  100 percent w/in 1 year of      60 percent w/in 2 years of     ...........  ...........
                                                                  funds available.                funds available; 100 percent
                                                                                                  w/in 3 years of funds
                                                                                                  available.
Neighborhood Stabilization Program....  Competition: $2 billion  NA............................  50 percent w/in 2 years of     ...........  ...........
                                                                                                  when HUD signs agreement;
                                                                                                  100 percent w/in 3 years of
                                                                                                  when HUD signs agreement.
Assisted Housing Energy and Green       Competition: $250        NA............................  100 percent w/in 2 years of    ...........  ...........
 Retrofit.                               million.                                                 receipt of funds.
--------------------------------------------------------------------------------------------------------------------------------------------------------

      Appendix B.--American Recovery and Reinvestment Act of 2009
    summary of department of housing and urban development programs

             (Includes Only Programs Applicable to Hawaii)

               FORMULA PROGRAMS OR DIRECT FUNDED PROJECTS

    Public Housing Capital Fund.--$2.985 billion for the capital and 
management activities of Public Housing Agencies as authorized under 
Section 9 of the United States Housing Act of 1937 (42 U.S.C. 1437g) 
(the ``Act''), including modernization and development of public 
housing. The funds cannot be used for operations or rental assistance.
    Native Hawaiian Housing Block Grant.--$10.2 million for new 
construction, acquisition, rehabilitation, including energy efficiency 
and conservation, and infrastructure development. These funds are made 
available to the Department of Hawaiian Home Lands as the housing 
entity eligible to receive funding under Title VIII of the Native 
American Housing Assistance and Self-Determination Act, for the purpose 
of providing housing assistance for Native Hawaiians on Hawaiian home 
lands.
    Tax Credit Assistance Program.--$2.25 billion invested in a special 
allocation of HOME funds to accelerate the production and preservation 
of tens of thousands of units of affordable housing. The housing credit 
agencies in each State shall distribute these funds competitively and 
according to their qualified allocation plan. Projects awarded low 
income housing tax credits in fiscal years 2007, 2008, or 2009 are 
eligible for funding, but housing credit agencies must give priority to 
projects that are expected to be completed by February 2012.
    Homeless Prevention and Rapid Re-Housing Program.--$1.5 billion 
invested in preventing homelessness and enabling the rapid re-housing 
of homeless families and individuals, helping them reenter the labor 
market more quickly and preventing the further destabilization of 
neighborhoods. The funds will provide for a variety of assistance, 
including: short-term or medium-term rental assistance and housing 
relocation and stabilization services, including such activities as 
mediation, credit counseling, security or utility deposits, utility 
payments, moving cost assistance, and case management.
    Project-Based Rental Assistance.--$2 billion invested in full 12-
month funding for Section 8 project-based housing contracts. This 
funding will enable owners to undertake much-needed project 
improvements to maintain the quality of this critical affordable 
housing.
    Community Development Block Grant.--$1 billion for approximately 
1,200 State and local governments to invest in their own community 
development priorities, including rehabilitating affordable housing and 
improving key public facilities--stabilizing communities and creating 
jobs locally.

                          COMPETITIVE PROGRAMS

    Neighborhood Stabilization Program.--$2 billion invested in 
mitigating the impact of foreclosures through the purchase and 
rehabilitation of foreclosed, vacant properties in order to create more 
affordable housing and renew neighborhoods devastated by the economic 
crisis.
    Public Housing Capital Fund.--$995 million for the capital and 
management activities of Public Housing Agencies for priority 
investments, including investments that leverage private sector funding 
or financing for renovations and energy conservation; addressing the 
needs of the elderly and persons with disabilities; providing a 
substantial amount of funding to transform distressed public housing; 
providing gap financing; and making a large investment in improving the 
energy efficiency and environmental performance of public housing.
    Green Retrofit Program for Multifamily Housing.--$250 million 
invested in energy efficient modernization and renovation of housing of 
HUD-sponsored housing for low-income, elderly, and disabled persons.

    Chairman Inouye. I thank you very much, Mr. Furutani.
    Have you had to hire additional personnel to carry out the 
disbursement of funds?
    Mr. Furutani. That has been a problem that we discussed. 
Most of the local governments have a set cadre of staff to 
process regular funding. Here we have $52 million extra that 
they need to push out, and this is one of the challenges, I 
think, we're facing.
    However, despite that fact, I know from our standpoint, I 
think we can do it without extra staffing. I'm not too sure 
about the localities, though. When, you know, when we really 
get into the reporting, the transparency part of it, there may 
be some extra load that I'm not sure that they can do. So, we 
need to take a look at that, and follow on what's going to 
happen when we get to the end of the processing period where we 
get the contractors on board, and we need to report how many 
jobs were created, and what were the periodic progress of the 
development, and so that may pose a problem down the line.
    Chairman Inouye. As of this moment, what do you estimate 
would be the number of jobs created, and jobs retained?
    Mr. Furutani. We also looked at that, and we wanted to 
provide some information in our testimony, however when we took 
a look at each of the different programs that I described, we 
felt that it was a little early right now, we need to wait 
until we get the contractors on board, serving the contractors 
and get a determination of how many jobs were maintained, and 
how many jobs were added. Maybe next year, probably.
    Chairman Inouye. Am I to conclude from your testimony that 
you're satisfied with the cooperation and coordination with 
other agencies?
    Mr. Furutani. Exactly, exactly. I think that's probably the 
key in why we have so much confidence in us meeting all of the 
established deadlines, because we have this working 
relationship, communication to the local entities, it's very 
good--cooperation is very good, and if we continue that, I'm 
pretty sure that we'll be meeting all of the Recovery Act 
requirements.
    Chairman Inouye. This has been a good day for me, because 
your reports have been optimistic.
    Mr. Furutani. Well, I think maybe in about a year we need 
to come back and tell you where we're at.
    But, I think my assessment of the situation, not likely. 
And, you know, that's why I had, you know, my staff here, 
because they're the ones that say they--we're going to make it. 
And I agree with them.
    Chairman Inouye. I thank you very much, Mr. Furutani, and 
the two Marks.
    Mr. Furutani. One is Michael.
    Chairman Inouye. Oh, Michael. Michael and Mark.
    Thank you very much.
    Our next witness is the communications director of the 
Hawaii Primary Care Association, Mr. Matthew A. Nagato.
    Mr. Nagato.

STATEMENT OF MATTHEW A. NAGATO, COMMUNICATIONS 
            DIRECTOR, HAWAII PRIMARY CARE ASSOCIATION
    Mr. Nagato. Thank you, Mr. Chairman.
    Thank you for inviting us to provide testimony of the 
effects of Recovery Act funding for Hawaii's federally 
qualified community health centers. My name is Matthew Nagato, 
communications director of the Hawaii Primary Care Association.
    Although small in comparison to the other agencies that 
have reported here today, the additional funding made available 
to us in Hawaii has been crucial for both the health centers 
and the nearly 120,000 people that live in the vulnerable 
communities that they serve.
    As I'd like to observe the 5-minute rule for oral 
testimony, I'd just like to note that the written version of 
the testimony that we've submitted will contain far greater 
detail on the breadth, scope and impact of these funds.
    The economic crisis has resulted in significant growth in 
Hawaii's unemployment, and the concurrent rise in the loss of 
job-related health insurance coverage. At the same time, 
declines in State revenue have resulted in the elimination of 
healthcare programs of vulnerable and underserved populations 
throughout our State. The Primary Care Association estimates 
that State funding that supports community health centers will 
be cut by at least $11 million in fiscal year 2010. This 
includes cuts of $7 million for Med-QUEST Services, and $4 
million for mental health, uninsured, perinatal, pharmacy, and 
family planning service contracts.
    Needless to say, at a time of exploding demand, these cuts 
have the potential to cripple the ability of health centers to 
meet basic levels of care needed in our communities. And given 
this deteriorating economic condition, it is also not 
surprising that community health centers have reported 
significant increases in demand for services, with the most 
notable increase being the need for mental healthcare.
    In total, the Recovery Act provided $2.5 billion to the 
Federal Health Resources and Services Administration, or HRSA, 
to preserve and create jobs, promote economic recovery, and 
help the people most affected by the recession. Under HRSA's 
formula, which used the number of uninsured patients seen at 
each facility--Hawaii's 14 community health centers--we'll 
share a total of $2.7 million to pay for operating costs 
related to an increased demand for healthcare.
    Hawaii's health centers will also receive $7.3 million for 
capital improvement programs. This CIP awards were based, not 
on the uninsured, but by the total number of patients served by 
each health center, and it should be noted that only partial 
CIP funding has been released by HRSA thus far.
    Finally, each community health center was also given an 
opportunity to apply for construction project support, under 
the Facility Investment Program.
    Hawaii's health centers in general give HRSA high marks for 
speed and responsiveness, although the more complicated Capital 
Improvement and Facility Investment Program applications were 
found to be confusing and burdensome to the process of rapidly 
obtaining Recovery Act funds.
    With the help of the Recovery Act, Hawaii's health centers 
are expanding hours, renovating facilities to make them more 
efficient, updating electronic medical record systems, and 
hiring additional medical and behavioral health providers.
    Our community health centers estimate that their IDS funds 
will support services for 13,000 patients, including nearly 
4,000 uninsured. This funding will prove crucial in the face of 
crippling State funding cuts, and the increased demand for 
services, but these funds will not make up for the entire 
shortfall.
    The situation in Hawaii is so dire that the $2.7 million in 
funds provided under the Recovery Act for increased demand for 
services are dwarfed by the $11 million loss in State funding 
cuts to health centers just for existing services. As we've 
noted, Recovery Act funds will directly affect jobs and 
services in our health centers at a time of great need in our 
local community. More importantly, they will also act as fiscal 
multipliers, as this money moves through the local economy. 
While the IDS and CIP grants will amount to $10 million for 
Hawaii's health centers, the aggregate economic effect will be 
nearly double that.
    With these Recovery Act funds, health centers will directly 
employ an additional 60 people with more than 300 jobs 
throughout the local community also supported, and since the 
majority of our health centers are in rural areas, most of the 
economic benefit will also be felt there.
    In summary, we'd like to commend the Recovery Act's 
investment in community health centers, and we appreciate that 
the Federal Government has recognized the value of reinforcing 
the healthcare safety net, during this unprecedented economic 
crisis, and also for recognizing that community health centers 
are an excellent venue for saving some of our country's most 
challenged communities. In Hawaii, these funds will help offset 
the precipitous decline in State funding, and give health 
centers the resources to maintain some level of service in the 
face of increased community demands.
    And finally, we'd like to thank Senator Inouye and the 
Committee on Appropriations, for this opportunity to provide 
our comments on the program, and submit testimony on behalf of 
Hawaii's health centers.
    [The statement follows:]

                  Prepared Statement of Matthew Nagato

    Chairman Inouye, thank you for inviting us to provide an overview 
on funding for Hawai`i's Community Health Centers (CHCs) and for the 
Hawai`i Primary Care Association under the American Recovery and 
Reinvestment Act (ARRA or Recovery Act) of 2009. My name is Matthew 
Nagato, Director of Communication for the Hawaii Primary Care 
Association.
    As shown below, the additional funding made available to us in 
Hawai`i has been crucial for both the health centers and the 
communities they serve. At a time of increased need and significant 
cut-backs in State health care funding, ARRA funds have helped sustain 
jobs and retain--and in some cases even expand--access to primary 
health care.
 context for recovery act funds for community health centers in hawai`i
    Hawai`i's rapid economic downturn has resulted in a precipitous 
growth in unemployment and an accompanying spike in the number of 
residents who are uninsured because they've lost job-related health 
insurance. At the same time, the reduction in State revenues has 
resulted in the elimination of long-established State health care 
programs for the economically disadvantaged, further exacerbating the 
problem. We estimate that State funding that supports community health 
centers will be cut by at least $11.1 million in fiscal year 2010.
    The greatest impact on health care funding has been on Med-QUEST 
administered services. In July, the Governor announced that she would 
be cutting $42 million in State funding from Med-QUEST, which, because 
of Federal participation in most programs, amounts to a loss of more 
than $100 million to the health care sector. (We would like to voice 
our gratitude for the additional Medicaid funds made available through 
ARRA earlier this year, without which the situation in Hawai`i would be 
far worse). Among the reductions most damaging to community health 
centers are:

                        [In millions of dollars]
------------------------------------------------------------------------
                                                                 Est.
                                                               negative
                                                              impact to
                   Med-QUEST program cuts                     community
                                                                health
                                                               centers
------------------------------------------------------------------------
Elimination of dental services for adults in the Medicaid            3.5
 program...................................................
Elimination of full Medicaid benefits and reimbursement for          2.5
 adult migrants under the Compacts of Free Association.....
Reduction in funds for Medicaid application assistance.....          0.6
Elimination of immigrant health initiative program.........          0.5
                                                            ------------
      Total Med-QUEST Impact on Community Health Centers...          7.1
------------------------------------------------------------------------

    Department of Health program cuts will result in both greater 
demand for community health center services and reduced resources. DOH 
has sharply curtailed both State-run and contracted services for mental 
health, which is especially devastating since community needs increase 
substantially during times of economic stress. Other reductions include 
funding for uninsured, perinatal, pharmacy, and family planning 
services. Community health centers expect their various services 
contracts with DOH to be diminished by at least $4 million.

                      FUNDING PURPOSES AND AMOUNTS

    The Recovery Act provided $2.5 billion to the Health Resources & 
Services Administration (HRSA) to preserve and create jobs, promote 
economic recovery, and help people most affected by the recession. The 
following shows how Hawai`i's Community Health Centers will benefit 
from these funds.
    Increased Demand for Services (IDS) Funds.--Hawai`i's 14 community 
health centers will share a total of $2.7 million over a 2-year period 
(March 2009 to February 2011) to pay for operating costs related to an 
increased demand for services. Divided equally between the 2 years and 
proportionately among the health centers, grants ranged from a low of 
$100,483 at the Lana`i Community Health Center to $342,984 at Kalihi-
Palama Health Center. Funding levels were determined by both the number 
of uninsured patients cared for by the health center and its total 
number of patients as reported for 2008. Funds for the current year 
were made available in April, 2009.
    HRSA-funded primary care associations received related one-time 
Recovery Act funds to provide assistance to community health centers. 
The Hawai`i Primary Care Association received $86,000 in 2009, which 
will be used for increased technical assistance and training for health 
centers and for collecting and disseminating information to policy 
makers, funders, and the general public about the needs for and 
availability of services for the medically disenfranchised.
    Capital Improvement Program (CIP) Funds.--Hawai`i's health centers 
expect to receive $7.3 million for CIP funds. Awards were based on the 
number of people served by each health center and ranged from $251,820 
for Lana`i to $1,195,070 for Wai`anae Coast Comprehensive Health 
Center. In Hawai`i, these funds will be used for a variety of purposes 
including essential repairs and maintenance; adding clinical space to 
expand medical, dental, and mental health services; purchasing and 
enhancing electronic medical records systems; improving facility 
infrastructure to increase security and energy efficiency; and 
replacing antiquated dental chairs and x-ray equipment with updated 
models. Only partial funding for CIP has been released so far.
    Facility Investment Program (FIP).--Besides IDS and CIP funds that 
were made available to every community health center, CHCs were given 
an opportunity to apply for funds for construction projects. An 
estimated 100 awards ranging in value from $750,000 to $12,000,000 are 
expected to be made by the end of the year. Proposals were due on 
August 6, 2009.

                  EFFECTS ON SERVICES AND THE ECONOMY

    Community health centers estimated their IDS funds would preserve 
or create 60 jobs while supporting health care services for an 
additional 12,790 patients, including 3,947 uninsured patients.
    Increased Services.--Given Hawai`i's economic circumstances, it is 
not surprising that community health centers report significant 
increases in demands for services, with the most notable increase in 
needs for mental health care. Communities hit by mass layoffs over the 
past 18 months and where populations are least settled have seen the 
greatest increase in demand for services to the uninsured. We 
anticipate a notable upswing in uninsured visits for the health centers 
most involved in caring for immigrants and migrants under the Compacts 
of Free Association, as adults from those populations do not qualify 
for public benefits. All health centers providing dental care for 
adults will be hard hit.
    With the help of Recovery Act funds health centers are responding 
to these increased demands by expanding hours, renovating facilities to 
make them more efficient, and hiring additional medical and behavioral 
health providers. They are also using IDS and CIP funds to expand 
dental programs in response to Hawai`i's critical dental access 
shortages .
    Economic Value.--Besides the primary virtue of supporting access to 
health care, Recovery Act funds are making a significant monetary 
contribution in Hawai`i's most economically challenged areas. Not only 
is there a direct impact in terms of funding, jobs, and services at 
community health centers, but there is also an extended ``ripple 
effect'' as money moves through the local economy. Ambulatory health 
care is one of the best investments to ensure community-wide 
recirculation of cash. The following tables show the geographic 
distribution of this Recovery Act funding and its extended value in the 
communities:

----------------------------------------------------------------------------------------------------------------
                                                                     IDS funds       Expanded      Expanded jobs
                                                                      (direct       output \1\    for ambulatory
                         Geographic area                            benefit to      (community      care sector
                                                                       CHCs)          impact)           \1\
----------------------------------------------------------------------------------------------------------------
Statewide:
    Hawai`i Island..............................................        $590,043      $1,174,186            22.7
    Maui........................................................        $335,722        $668,087            12.9
    Lana`i......................................................        $100,483        $199,961             3.9
    Moloka`i....................................................        $117,193        $233,214             4.5
    Kaua`i......................................................        $174,155        $346,568             6.7
    O`ahu.......................................................      $1,382,954      $2,752,078            53.1
                                                                 -----------------------------------------------
      Total Statewide...........................................      $2,700,550      $5,374,094           103.7
                                                                 ===============================================
Rural Hawai`i...................................................      $1,937,689      $3,856,001            74.4
Urban Honolulu..................................................        $762,861      $1,518,093            29.3
----------------------------------------------------------------------------------------------------------------
\1\ The calculations for expanded output and expanded jobs supported are according to the U.S. Department of
  Commerce Regional Input-Output Modeling System (RIMS II) for Hawai`i in 2009.


----------------------------------------------------------------------------------------------------------------
                                                                     CIP funds       Expanded      Expanded jobs
                                                                      (direct       output \1\    for repair and
                         Geographic area                            benefit to      (community     maint. sector
                                                                       CHCs)          impact)           \1\
----------------------------------------------------------------------------------------------------------------
Statewide:
    Hawai`i Island..............................................      $1,547,515      $3,079,555            43.4
    Maui........................................................        $841,940      $1,675,461            23.6
    Lana`i......................................................        $251,820        $501,122             7.1
    Moloka`i....................................................        $304,740        $606,433             8.6
    Kaua`i......................................................        $473,650        $942,564            13.3
    O`ahu.......................................................      $3,898,445      $7,757,906           109.4
                                                                 -----------------------------------------------
      Total Statewide...........................................      $7,318,110     $14,563,039           205.4
                                                                 ===============================================
Rural Hawai`i...................................................      $5,372,650     $10,691,574           150.8
Urban Honolulu..................................................      $1,945,460      $3,871,465            54.6
----------------------------------------------------------------------------------------------------------------
\1\ The calculations for expanded output and expanded jobs supported are according to the U.S. Department of
  Commerce Regional Input-Output Modeling System (RIMS II) for Hawai`i in 2009.


----------------------------------------------------------------------------------------------------------------
                                                                   Combined IDS
                                                                   and CIP funds     Expanded
                         Geographic area                              (direct         output       Expanded jobs
                                                                    benefit to      (community          \1\
                                                                       CHCs)          impact)
----------------------------------------------------------------------------------------------------------------
Statewide:
    Hawai`i Island..............................................      $2,137,558      $4,253,740            66.1
    Maui........................................................      $1,177,662      $2,343,547            36.5
    Lana`i......................................................        $352,303        $701,083            10.9
    Moloka`i....................................................        $421,933        $839,647            13.1
    Kaua`i......................................................        $647,805      $1,289,132            20.0
    O`ahu.......................................................      $5,281,399     $10,509,984           162.5
                                                                 -----------------------------------------------
      Total Statewide...........................................     $10,018,660     $19,937,133           309.1
                                                                 ===============================================
Rural Hawai`i...................................................      $7,310,339     $14,547,575           225.2
Urban Honolulu..................................................      $2,708,321      $5,389,559            83.9
----------------------------------------------------------------------------------------------------------------
\1\ The calculations for expanded output and expanded jobs supported are according to the U.S. Department of
  Commerce Regional Input-Output Modeling System (RIMS II) for Hawai`i in 2009.

                          COMMENTS ON PROCESS

    All community health centers emphatically agree that Recovery Act 
funding is crucial in the face of crippling State funding cuts and 
increased needs, but does not make up the shortfall. The situation is 
so dire in Hawai`i that the $2.7 million in increased program support 
from HRSA is far less than the losses in State funding.
    Recognizing that time was of the essence and that the process was 
new to all concerned, health centers generally give HRSA kudos for 
speed and responsiveness. Probably because the CIP and FIP initiatives 
were more complex, a certain amount of confusion and seemingly 
unnecessary requirements were associated with the processes to apply 
for them.
    Some reflections on this unique opportunity to apply for Federal 
funding for both program needs and capital include:
    Funding Formula.--HRSA needed a simple, understandable funding 
methodology in order to distribute money quickly. All community health 
centers are in acute need. However, some health centers are being 
immediately affected more than others, particularly those 
disproportionately serving the newly unemployed, immigrants, migrants, 
and homeless individuals. It is also apparent in Hawai`i that the 
smallest, most geographically remote health centers have singular 
responsibility for health services in their communities but because of 
their locations, have higher operating costs. We thank this Committee 
for its past support for the HRSA community health center program and 
ask for future increases in that program's funding since competitive 
grant opportunities and needs-based grant adjustments are likely to be 
the best ways to address these disparities.
    Capital Needs.--Almost all health centers in Hawai`i have 
significant needs for capital funds for facility development, 
expansion, or replacement. Most CHCs initially planned to apply for FIP 
funding, although, ultimately, some were not able to do so. This 
underscores an on-going challenge to the expansion of our community 
health center network in Hawai`i where costs for land and construction 
are high and public and private funding for capital projects is very 
limited.
    An additional issue was the short time in which to respond to 
Federal funds intended for rapid economic stimulus. In the highly 
competitive FIP proposal process only projects that demonstrate a high 
level of readiness are viable. Even health centers that had advanced 
capital project plans found it daunting to secure State and county 
permitting, demonstrate environmental and historic building impacts, 
and otherwise complete paperwork in time to meet the FIP application 
deadline. To address these needs, we ask the Committee to consider 
creating an on-going, predictable, and competitive capital planning and 
grants program within the community health center program.

                               CONCLUSION

    In summary we commend the investment in community health centers by 
the American Recovery and Reinvestment Act of 2009. We appreciate that 
the Federal Government recognized not only the crucial value of 
bolstering the health care safety net at this time but also the fact 
that community health centers are an accountable and efficient means to 
stimulate the economies of our country's most challenged communities. 
In Hawai`i, and probably most other States, ARRA funds will help off-
set the steep decline in State funding for services and give the health 
centers resources to maintain and possibly expand services to meet new 
community demands.
    We also note the good work done by the Health Services and 
Resources Administration in responsibly distributing and accounting for 
these funds.
    Finally, we thank Chairman Inouye and the Committee on 
Appropriations for this opportunity to provide our comments on this 
program.

    Chairman Inouye. I thank you very much, Mr. Nagato.
    At my request, Dr. Mary Wakefield, the newly appointed 
Administrator of the Health Resources and Services 
Administration, will be visiting Hawaii during the month of 
October. She'll be going to our neighbor islands and Oahu, and 
I hope that you'll take advantage of this trip and point out 
our unique problems.
    Second, I've been receiving calls and letters from people 
who come from the former trust territory, and some have 
complained that the coverage is not adequate. What are your 
thoughts on this?
    Mr. Nagato. Thank you, Senator. I'd like to answer the 
first part of your question, regarding Dr. Wakefield's visit, 
I'd first like to thank your office for helping to make that 
happen. We're pleased that she's not only going to be able to 
visit community health centers in our State, but she's also 
going to be a featured speaker at the Primary Care 
Association's Annual Conference on October 8.
    I think we can definitely use Dr. Wakefield and her support 
for patient-centered medical homes. In Hawaii, there are a 
handful of community health centers who are piloting this 
concept of integrated care under a medical home, and we 
strongly believe that these patients entering medical home 
pilots will help to address the three core principles of the 
President's healthcare reform agenda, and that it will increase 
access to care, it will improve clinical quality and health 
outcomes, and over the long term, help to reduce overall 
healthcare costs.
    And so, we look forward to the opportunity to have Dr. 
Wakefield come to Hawaii and see those pilots in progress.
    Regarding the loss of coverage to the Compacts of Free 
Association (COFA) migrants, we absolutely feel very strongly 
that the State needs to provide some additional level of 
support beyond the basic health Hawaii program that they've 
offered to COFA migrants, as the alternative to the Medicaid 
coverage that they had.
    Two of the community health centers here on Oahu--Clepaloma 
Health Center, and Kakoakalehi Valley--will be absolutely 
devastated by COFA migrants who lose access to coverage, 
particularly those who suffer from kidney failure and lose 
access to dialysis and chemotherapy treatments. And for those 
patients, ultimately they'll end up having to go to emergency 
rooms, which will end up costing the system far more than 
providing ongoing coverage under the Medicaid program.
    Chairman Inouye. So, you think the stimulus funds would be 
good for this purpose?
    Mr. Nagato. Yes, yes. But as I noted in my testimony, the 
funds provided for under the stimulus program are far less than 
the amount of money that's being taken out of the social safety 
net programs.
    Chairman Inouye. Now that the law provides nurse 
practitioners a wide--broader area of responsibility, are you 
going to make use of those people?
    Mr. Nagato. Absolutely. Nurse practitioners are a very 
versatile and affordable alternative care provider, 
particularly for health centers in rural communities that might 
have difficulty in recruiting and retaining medical doctors as 
the primary givers of care. Nurse practitioners, given their 
versatility, would be absolutely essential for health centers 
like that.
    On the other hand, going back to the medical home, nurse 
practitioners are an integral part of the care coordination in 
the patient-centered medical home, and as I noted, it supports, 
I think, the three core principles of the President's agenda on 
healthcare reform. And if we could get HRSA and Dr. Wakefield's 
continued support for patient reform--we're working with State 
governments, Medicaid, Medicare, and certainly the private 
insurance companies, to recognize the value--not just of the 
medical home, but all of the providers that operate within a 
medical home, like nurse practitioners--I think it will be very 
beneficial toward advancing the evolution of the healthcare 
system.
    Chairman Inouye. I believe I forgot to tell the witnesses 
or anyone here who wished to submit testimony, that in 
communicating with me, I would suggest you write to my Honolulu 
office in the Federal building, because as a result of 9/11, 
letters that are sent to Washington are subject to security 
inspection, such as anthrax and matters of that nature. And as 
a result, the delay may be anywhere from a month or more from 
that, and I don't want this to happen.
    So, I hope that you are able to communicate with my 
Honolulu office, and the staff there can transmit it to me by 
e-mail or by something like that, but we can get it right away 
that way.
    And I thank you very much for the testimony.
    Mr. Nagato. Thank you, Senator.
    Chairman Inouye. You've been most helpful.
    And now, our final panel, may I call upon Mr. William 
Parks, the Special Assistant and State of Hawaii Liaison in the 
Office of Electricity Delivery and Energy Reliability, U.S. 
Department of Energy, Mr. Theodore Liu, director of the Hawaii 
Department of Business, Economic Development and Tourism, and 
Mr. Maurice Kaya, executive director of the Hawaii Renewable 
Energy Development Venture, Pacific International Center for 
High Technology Research.
    Boy, you've got some fancy titles, here.
    May I call upon Mr. William Parks.

STATEMENT OF WILLIAM PARKS, SPECIAL ASSISTANT AND STATE 
            OF HAWAII LIAISON, OFFICE OF ELECTRICITY 
            DELIVERY AND ENERGY RELIABILITY, U.S. 
            DEPARTMENT OF ENERGY
    Mr. Parks. Thank you, Mr. Chairman, and for the opportunity 
to be here and address this field hearing today.
    I have been stationed in Hawaii for the past 3 years, 
working with the State and counties on defining energy 
alternatives to oil dependency. I've submitted several 
documents on the status of ARRA actions by the DOE, and on the 
Hawaii clean energy initiative for the record.
    [The information follows:]

               ARRA Energy Awards for the State of Hawaii
PACOM Awarded $3,000,000 To Address Federal Energy Management
    Based on a competitive approach across the services and commands 
PACOM was selected for a large amount of support. In support of DOD and 
the State's efforts, the Department of Energy recently approved over $3 
million in technical assistance projects aimed at bringing the most 
advance energy efficiency, renewable power generation and micro-grid 
technologies to DOD installations in Hawaii and throughout the Pacific 
region. This effort will guide billions of dollars of future DOD 
investments.
Hawaiian Electric Company--$750,000 Awarded for Hawaii Utility 
        Integration Initiatives (H.U.I.) To Enable Wind
    On July 16 U.S. Department of Energy Secretary Steven Chu announced 
the selection of 28 new wind energy projects for up to $13.8 million in 
funding--including $12.8 million in Recovery Act funds. These projects 
will help address market and deployment challenges including wind 
turbine research and testing and transmission analysis, planning, 
assessments. The money to HECO is Recovery Act funding to address three 
areas of renewable energy development on the Hawaiian Islands.
Weatherization
    State of Hawaii--$1,616,984 in initial weatherization funds awarded 
August 13th Hawaii will use its Recovery Act weatherization funds to 
weatherize more than 650 homes across the State over the next 3 years. 
The Hawaii Office of Community Services (OCS) will administer the 
program through two local community action organizations. Honolulu 
Community Action Program, Inc. will carry out the weatherization 
assistance in the city and county of Honolulu, and Maui Economic 
Opportunity, Inc. will conduct weatherization assistance in the three 
remaining counties of Hawaii, Kauai, and Maui. The Hawaii OCS will help 
provide training and technical assistance for the local agencies to 
ensure that the weatherization workforce is able to successfully carry 
out the goals of the program: reducing energy consumption and utility 
bills for low-income families, while creating and retaining jobs across 
the State.
    After demonstrating successful implementation of its plan, the 
State will receive an additional $2 million, for a total $4,041,461.
State Energy Program
    The State Energy Program (SEP) provides grants to States and 
directs funding to State energy offices from technology programs in 
DOE's Office of Energy Efficiency and Renewable Energy. States use 
grants to address their energy priorities and program funding to adopt 
emerging renewable energy and energy efficiency technologies. Hawaii is 
eligible for $25,930,000 from the Recovery Act in 2009. Hawaii has 
received 50 percent of these funds to date. Hawaii will use its 
Recovery Act funding for the SEP to improve energy efficiency and 
expand the deployment of renewable energy technologies, which will help 
advance mutual State and national goals for creating and maintaining 
jobs, reducing oil dependence, and reducing greenhouse gas emissions. 
Hawaii's energy efficiency strategy will directly fund high performance 
buildings, government and residential building retrofits, and energy 
efficiency measures in the State's hospitality industry. The program 
will also provide technical assistance and training to building owners, 
developers, design professionals, and county building code officials to 
ensure that new and renovated buildings are designed and built with 
high efficiency measures. Hawaii will target bringing buildings to 
ENERGY STAR and Leadership in Energy and Environmental Design (LEED) 
standards.
    The SEP funding may be used to provide for residential energy 
audits or other energy-saving improvements, to develop renewable energy 
and alternative fuel projects, to promote ENERGY STAR products, to 
upgrade the energy efficiency of State and local government buildings, 
and other innovative State efforts to help families save money on their 
energy bills.
Energy Efficiency and Conservation Block Grants
    Energy Efficiency and Conservation Block Grants is a program 
developed in the Energy Investment and Security Act on 2007. The 
American Recovery and Reinvestment Act of 2009 established for the 
first time an appropriation of funds to support these grants. Over $2.6 
billion in formula grants are now available to States, U.S. 
territories, local governments and Indian tribes under the Energy 
Efficiency and Conservation Block Grants (EECBG) Program. Federal 
grants may be used to reduce energy use and fossil fuel emissions, and 
for improvements in energy efficiency. The EECBG Program is 
administered by the Office of Weatherization and Intergovernmental 
Programs in the Office of Energy Efficiency and Renewable Energy of the 
U.S. Department of Energy (DOE).
    The State of Hawaii is eligible for $9,593,500 in EECBG funds and 
the counties of Hawaii, Maui, Kauai and the City of Honolulu are 
eligible for an additional $5,474,700 allocated based on population and 
other factors. These applications are being reviewed and negotiated 
with the State and local officials to deliver the funds to the Islands 
as quickly as possible.
Emergency Preparedness
    The DOE's Office of Electricity Delivery and Energy Reliability is 
providing grants to improve State emergency preparedness planning and 
energy assurance capabilities, helping to ensure quick recovery and 
restoration from any energy supply disruptions. These awards were 
announced on August 12th, and the State of Hawaii has been notified 
that it will receive $318,196 under this initiative.
Smart Grid
    The University of Hawaii at Manoa-Hawaii Natural Energy Institute 
won an award of $5,548,585 for a dispatchable Distribution Feeder for 
Peak Load Reduction and Wind Farming. The University of Hawaii will 
explore the management of distribution system resources for improved 
service quality and reliability, transmission congestion relief, and 
grid support functions.
                                 ______
                                 
   Hawai`i Clean Energy Initiative Summary--January 2008-August 2009

                             TRANSFORMATION

    The State of Hawaii depends on imported oil to meet over 90 percent 
of its energy needs, leaving Hawaii vulnerable to supply disruptions 
and greatly impacted by volatile energy prices. The goal of HCEI is to 
achieve a 70 percent clean energy economy in Hawaii by 2030. HCEI 
establishes a long-term partnership between the State of Hawaii and the 
U.S. Department of Energy (DOE) that will result in a fundamental and 
sustained transformation of the financial, regulatory, legal, and 
institutional systems that govern energy planning and delivery. Key 
partners include the counties, DOD, Department of Hawaii Homelands, 
private companies, non-profits and many other entities.

                              OPPORTUNITY

    Economically and culturally sensitive use of natural resources can 
provide energy supply security and price stability for the people of 
Hawaii as well as significant environmental benefits and economic 
growth opportunities. The initiative is working on multiple fronts to 
accomplish a number of goals:
  --Reduce energy demand 30 percent by 2030 through retro-fitting 
        buildings, strengthening codes and standards, installing 
        advanced controls, and building zero net energy homes and 
        businesses;
  --Increase renewable energy to 40 percent by 2030 by using Hawaii's 
        natural resources, including wind, sunshine, geothermal, 
        biomass, municipal waste, hydro, and ocean sources--enabled by 
        the development of a smart grid infrastructure, an undersea 
        cable, energy storage, and electric vehicles;
  --Achieve 70 percent clean energy in transportation by growing 
        biofuel feedstocks in conjunction with food and other needs and 
        readying the island systems for electric vehicles and other 
        advanced technologies.
    Hawaii urgently needs to transition to an economy powered by clean 
energy, instead of imported oil.



                          BENEFITS FOR HAWAII

    Create opportunities at all levels of society that ensure 
widespread distribution of the benefits resulting from the transition 
to a clean, sustainable energy State;
    Demonstrate and foster innovation in the use of clean energy 
technologies, financing, and enabling policies and regulations;
    Build the workforce of the future to enable and support a clean 
energy economy;
    Establish an ``open source'' learning model for others seeking to 
achieve similar goals.

     MAJOR ACCOMPLISHMENTS AND LESSONS LEARNED THROUGH AUGUST 2009

    Integrated Participation.--Over 100 stakeholders are engaged in 
developing analysis and building policy recommendations for HCEI, 
bringing together national experts, local Hawaii leaders, and 
investors--both local and national. The technical working groups meet 
quarterly, and various other forums have also been convened--including 
two sessions of regulatory training and an investor's roundtable, among 
others. Primary lessons learned have been the importance of frequent 
communication among various parts of the initiative, and the need to 
create platforms for an even broader cross-section of stakeholders to 
become involved in HCEI.
    Policy Wins.--Legislative successes were achieved in 2009 (such as 
an increased RPS) to set the structure for a transformation of the 
energy economy, including institutional change and the framework 
agreement with the HECO companies that led to the opening of key 
dockets in the PUC. Primary lessons learned are the importance of early 
and focused outreach to policymakers and the establishment of a clear 
process that shows how HCEI fits into the State policy process. 
Additional policy proposals are currently being analyzed and developed 
for 2010.
    Federal Commitment.--There is strong commitment from Federal 
Government, not only in policy design, but also in willingness to 
invest--through ARRA funds and Federal support of other State programs. 
In addition, DOE has funded one Office of Electricity position and two 
National Renewable Energy Laboratory personnel to live in Honolulu full 
time to support the initiative.
    Outreach.--HCEI has launched a comprehensive website for the 
public, held a clean energy festival in July 2009, and is fully engaged 
in promoting HCEI in the media. The lesson of the past year is that 
additional efforts are needed on this front to ensure the initiative's 
success, and that focused outreach to other jurisdictions attempting 
similar programs is necessary to scale and replicate this initiative.
    Technical Projects.--The first round of partnership projects was 
launched in 2008 focusing on integrating renewable energy into island 
grids, constructing net zero energy buildings, and designing 100 
percent clean energy microgrids. Primary lessons learned include the 
value of projects in making clean energy real for the community and the 
need to communicate the results of such projects to a broad range of 
stakeholders. The next round of projects is under consideration.

               MAJOR NEAR-TERM THRUSTS AND OPPORTUNITIES

    Renewable Energy Project Development and Regulation.--Key 
priorities are bringing investors into Hawaii to develop projects in 
the State, helping the PUC tackle complicated issues, making sure the 
clean energy resources are sustainable, and ensuring long term energy 
security.
    Undersea Cable.--The key element is delivering clean energy 
resources to where the load is greatest; for that reason, an undersea 
cable is an important element for success. Developing the right State 
process, pursuing a realistic financing strategy, and understanding and 
resolving technical questions have been particular areas of focus.
    Energy Efficiency Implementation.--The primary focus points for 
energy efficiency are realizing the aggressive goals established by 
policy, implementing energy efficiency programs, coordinating building 
code development across the counties, and working with specific sectors 
(e.g., hospitality) to realize large-scale change.
    Progress on Transportation.--Key priorities are understanding the 
biofuels potential and path forward for local bioenergy production, 
addressing transportation needs at the State policy level including 
electrification of vehicles, folding in marine and jet fuel to the HCEI 
program.
    Public Outreach and Acceptance.--The initiative is focused on 
building a broader understanding of these issues in the community and 
creating the demand for clean energy such that residents will 
understand the tradeoffs (e.g., economic, environmental) needed to make 
clean energy possible, and such that the leaders of Hawaii continue to 
drive these objectives forward.

    Mr. Parks. Today over $32 million in ARRA funds have been 
released to the State for energy activities. Another $15 to $20 
million is expected over the next few months. Additional 
funding is available to successful private sector proposals, 
they expect further announcements on these over the next 6 
months.
    The Hawaii clean energy initiative has positioned Hawaii 
well for justifying the expenditure of these Federal funds, and 
there's close planning between the State and the DOE to best 
utilize these resources.
    Coordination with other partners, such as the DOD, within 
PACOM, Hawaii National Energy Institute, the university, and 
the counties have further aided in prioritizing needed energy 
actions within the State, indeed, the HCI is a model of 
Federal, State and local partnership, and the interest in this 
program has grown worldwide, as a result of it.
    The ARRA was created as a financial stimulus. For 
expediency, it used existing programs and pathways within the 
Federal Government to move funds. In addition, longer term 
actions will be needed to more fully transform the energy 
sector. Infrastructure investments take multiple years for 
environmental impact statements, siting, permits and 
construction. Continued coordination of annual funds and 
opportunities will be crucial to fully realize Federal 
benefits, and to reach the State energy mandate of 70 percent 
clean energy by 2030.
    Despite the great efforts to date, the State could position 
itself better to be competitive for future solicitations, and 
cost-sharing opportunities. The lack of State funds for energy 
activities, given the vulnerability of this State to oil price 
volatility, is worrisome. The Federal Government can be a great 
partner, but the State needs to lead State activities. Hawaii's 
success in winning ARRA funds and future funds may be limited 
until the State is more successful at contributing to its own 
energy sustainability, as many other States do.
    In addition, a sustained core energy capability within the 
State to develop the clean energy--to help developing the clean 
energy business sector--would further enable these businesses 
and strengthen the Hawaii economy.
    There are several key areas where the ARRA funds are 
addressing critical energy issues this year, defining the needs 
and the benefits, and with inter-island cable, creating a 
regulatory environment for utility success, reinforcing State 
policies for a clean energy future, including transportation, 
developing a bio-energy roadmap and master plan, and new 
technology adoption are a few of these key areas that our funds 
are supporting this year.
    Hawaii can be a model for the world, bringing benefits and 
security to the people of Hawaii, and justifying further 
Federal investment. My hope is that we can fully realize this 
unique opportunity, and I thank you for the opportunity to 
speak here today.
    [The statement follows:]
                  Prepared Statement of William Parks

    Thank you, Mr. Chairman and members of the committee for the 
opportunity to provide an update on the current status of smart grid 
activities at the Department of Energy as well as our future directions 
and priorities.
    The Energy Independence and Security Act of 2007 (EISA) and the 
American Recovery and Reinvestment Act of 2009 (Recovery Act) expands 
the role of the Federal Government substantially in research, 
development, demonstration, and deployment of smart grid technologies, 
tools, and techniques. To fulfill this role, the U.S. Department of 
Energy (DOE) and the Office of Electricity Delivery and Energy 
Reliability (OE) are carrying out smart grid activities in three 
primary areas: (1) Smart Grid Investment Grants, (2) Smart Grid 
Demonstrations, and (3) Smart Grid Research and Development (R&D).
    One of our top priorities is to responsibly disburse funds made 
available under the Recovery Act to develop and deploy smart grid 
technologies designed to modernize the Nation's electric system. The 
Recovery Act provided a total of $4.5 billion to modernize and enhance 
security and reliability of the electric grid. Most of the funding--
about $4 billion--is supporting smart grid efforts. On June 25, 2009 we 
released two Funding Opportunity Announcements (FOAs)--one for Smart 
Grid Investment Grants and the second for Smart Grid Demonstrations. 
The first Smart Grid Investment Grants application period closed on 
August 6, and the one for the Smart Grid Demonstrations will close on 
August 26. We will be evaluating hundreds of applications over the 
coming months and making awards for projects that will show the 
benefits of a more modern grid that uses smart grid technologies, 
tools, and techniques for the betterment of electricity consumers 
across America. We expect this funding to spark innovation, create 
businesses, and provide new jobs for American workers. We believe these 
programs represent a ``once-in-a-generation'' chance for game-changing 
investments and we are dedicated to making sure that American taxpayers 
get maximum value from these investments in terms of a more reliable, 
secure, efficient, affordable, and clean electric system.
    While these programs are about transforming the delivery and 
management of electric power through application of today's smart grid 
technologies, tools, and techniques (such as phasor measurement units 
and advanced metering infrastructure), we are simultaneously working on 
``next generation'' systems for expanding the capacity and increasing 
the flexibility and functionality of electric transmission and 
distribution systems. Our fiscal year 2010 budget request for smart 
grid and related R&D is aimed at harnessing the Nation's scientific and 
engineering talent in electric systems and focusing it on discovery and 
innovation for new materials, algorithms, concepts, and prototypes for 
power lines, substations, transformer banks, feeder lines, storage 
systems, and switchgear to increase efficiency, reliability, security, 
resiliency, functionality, throughput, and energy density while 
reducing costs, footprint, and environmental impacts.

               SMART GRID PERFORMANCE METRICS AND TRENDS

    Section 1302 of Title XIII of the Energy Independence and Security 
Act of 2007 directed the Secretary of Energy to ``. . . report to 
Congress concerning the status of smart grid deployments nationwide and 
any regulatory or government barriers to continued deployment.'' In 
July the Department of Energy released the Smart Grid Systems report. 
The report finds that while deployment of many smart grid capabilities 
are just beginning to emerge, penetration levels for substation 
automation, smart metering, and distributed generation technologies are 
growing significantly.
    A part of the vision of a smart grid is its ability to enable 
informed participation by customers, making them an integral part of 
the electric power system. With bi-directional flows of energy and 
coordination through communication mechanisms, a smart grid should help 
balance supply and demand and enhance reliability by modifying the 
manner in which customers use and purchase electricity. These 
modifications can be the result of consumer choices that motivate 
shifting patterns of behavior and consumption. These choices involve 
new technologies, new information regarding electricity use, and new 
pricing and incentive programs.
    Supporting the bi-directional flow of information and energy is a 
foundation for enabling participation by consumer resources. Advanced 
metering infrastructure (AMI) is receiving the most attention in terms 
of planning and investment. Currently AMI comprises about 4.7 percent 
of all electric meters and their use for demand response is growing. 
Approximately 52 million meters are projected to be installed by 2012. 
As many service areas do not yet have demand response signals 
available, a significant number of the meters installed are estimated 
not being used for demand response activities. Pricing signals can 
provide valuable information for consumers (and the automation systems 
that reflect their preferences) to decide on how to react to grid 
conditions. A Federal Energy Regulatory Commission (FERC) study found 
that in 2008 slightly over 1 percent of all customers received a 
dynamic pricing tariff, with nearly the entire amount represented by 
time-of-use tariffs (energy price changes at fixed times of the day). 
Lastly, the amount of load participating based on grid conditions is 
beginning to show a shift from traditional interruptible demand at 
industrial plants toward demand-response programs that either allow an 
energy-service provider to perform direct load control or provide 
financial incentives for customer-responsive demand at homes and 
businesses.
    Distributed energy resources and interconnection standards to 
accommodate generation capacity appear to be moving in positive 
directions. Accommodating a large number of disparate generation and 
storage resources requires anticipation of intermittency and 
unavailability, while balancing costs, reliability, and environmental 
emissions. Distributed generation (carbon-based and renewable) and 
storage deployments, although a small fraction (1.6 percent) of total 
summer peak, appear to be increasing rapidly. In addition, 31 States 
have interconnection standards in place, with 10 States and the 
District of Columbia progressing toward a standard, one State with some 
elements in place, and only 8 States with none.
    Gross annual measures of operating efficiency have been improving 
slightly as energy lost in generation dropped 0.6 percent to 67.7 
percent in 2007 and transmission and distribution losses also improved 
slightly. The summer peak capacity factor declined slightly to 80.8 
percent while overall annual average capacity factor is projected to 
increase slightly to 46.5 percent. Contributions to these measures 
include smart grid related technology, such as substation automation 
deployments. While transmission substations have considerable 
instrumentation and coordination, the value proposition for 
distribution-substation automation is now receiving more attention. 
Presently about 31 percent of substations have some form of automation, 
with the number expected to rise to 40 percent by 2010. The deployment 
of dynamic line rating technology is also expected to increase asset 
utilization and operating efficiency; however, implementations thus far 
have had very limited penetration levels.

                THE SMART GRID INVESTMENT GRANT PROGRAM

    The overall purpose of the Smart Grid Investment Grant Program 
(SGIG) is to accelerate the modernization of the Nation's electric 
transmission and distribution systems and promote investments in smart 
grid technologies, tools, and techniques to increase flexibility, 
functionality, interoperability, cyber security, situational awareness, 
resiliency, and operational efficiency.
    The goals of the program involve accelerating progress toward a 
modern grid that provides the following specific characteristics that 
DOE believes define what a smart grid would accomplish:
  --Enabling informed participation by consumers in retail and 
        wholesale electricity markets;
  --Accommodating all types of central and distributed electric 
        generation and storage options;
  --Enabling new products, services, and markets;
  --Providing for power quality for a range of needs by all types of 
        consumers;
  --Optimizing asset utilization and operating efficiency of the 
        electric power system;
  --Anticipating and responding to system disturbances; and
  --Operating resiliently to attacks and natural disasters.
    The SGIG FOA issued on June 25, 2009 calls for the submission of 
project applications. The first phase of applications was due August 6, 
2009, and subsequent phases will be offered if funds are available. We 
expect to make selections in October or November 2009.
    There is approximately $3.4 billion available for this solicitation 
for projects in two categories:
  --Smaller projects in which the Federal share would be in the range 
        of $300,000 to $20,000,000.
  --Larger projects in which the Federal cost share would be in the 
        range of $20,000,000 to $200,000,000.
    We expect about 60 percent of the funds will be allocated to larger 
projects and about 40 percent to smaller projects. The period of 
performance for awarded projects is 3 years, or less.
    Project applications will be considered in six topic areas:
  --Equipment manufacturing,
  --Customer systems,
  --Advanced metering infrastructure,
  --Electric distribution systems,
  --Electric transmission systems, and
  --Integrated and/or crosscutting systems.
    A technical merit review of the applications will be conducted by 
our own staff plus experts from colleges, universities, national 
laboratories, and the private sector. Reviewers will be subject to non-
disclosure and conflict of interest agreements and will apply the 
following technical merit review criteria:
  --The adequacy of the technical approach for enabling smart grid 
        functions;
  --The adequacy of the plan for project tasks, schedule, management, 
        qualifications, and risks;
  --The adequacy of the technical approach for addressing 
        interoperability and cyber security; and
  --The adequacy of the plan for data collection and analysis of 
        project costs and benefits.

                  THE SMART GRID DEMONSTRATION PROGRAM

    The overall purpose of the Smart Grid Demonstrations Program (SGDP) 
is to demonstrate how a suite of existing and emerging smart grid 
technologies can be innovatively applied and integrated to investigate 
technical, operational, and business-model feasibility. The aim is to 
demonstrate new and more cost-effective smart grid technologies, tools, 
techniques, and system configurations that significantly improve upon 
the ones that are either in common practice today or are likely to be 
proposed in the Smart Grid Investment Grant Program.
    The SGDP FOA was also released on June 25th and calls for 
applications to be submitted by August 26, 2009 in two areas of 
interest:
  --Regional demonstrations, and
  --Grid-scale energy storage demonstrations.
    The regional demonstration area covers projects involving electric 
system coordination areas, distributed energy resources, transmission 
and distribution infrastructure, and information networks and finance. 
The grid-scale energy storage demonstration area covers battery storage 
for load shifting or wind farm diurnal operations, frequency regulation 
ancillary services, distributed energy storage for grid support, 
compressed air energy storage, and demonstration of promising energy 
storage technologies and advanced concepts.
    Approximately $615 million is available for awards with 8-12 
regional demonstration projects and 12-19 energy storage projects 
expected. The period of performance for awards is 3 to 5 years.

                  INTEROPERABILITY AND CYBER SECURITY

    A key aspect for the implementation of smart grid technologies, 
tools, and techniques nationwide is the need to address 
interoperability and cyber security. Development of industry-based 
standards for governing how the many different devices involved in 
smart grid can communicate and interoperate with each other in a 
seamless, efficient, and secure manner is one of the top priorities for 
OE and other Federal and State agencies. Since the smart grid vision 
involves the two-way flow of both information and electric power, and 
for higher degrees of automation and control than exist in today's 
electric transmission and distribution system, it is necessary for 
there to be standards that guide manufacturers and smart grid 
developers, foster innovation, and provide for a platform that enables 
a wide range of offerings to come to market and have the opportunity to 
compete. As occurred with telecommunications and the evolution of the 
Internet, effective standards form the basis upon which entrepreneurs 
can bring innovations to the marketplace, build new businesses, and 
create job opportunities.
    At the same time, it is paramount that smart grid devices and 
interoperability standards include protections against cyber intrusions 
and have systems that are designed from the start (not patches added 
on) that prevent hackers from disrupting grid operations from gaining 
entry through the millions of new portals created by the deployment of 
smart grid technologies, tools, and techniques.
    Through the Federal Smart Grid Task Force, we are collaborating 
with the National Institute of Standards and Technology (NIST) and 
other agencies and organizations in the development of a framework and 
roadmap for interoperability standards, as called for in EISA Section 
1305. Cyber security is a critical element of these efforts. Our 
collaboration with NIST includes financial assistance involving $10 
million of Recovery Act funding that was designated to support the 
development and implementation of interoperability standards.
    As a demonstration that the DOE is working to eliminate cyber 
security risks, the following language is part of the smart grid FOAs:
    Cyber security should be addressed in every phase of the 
engineering lifecycle of the project, including design and procurement, 
installation and commissioning, and the ability to provide ongoing 
maintenance and support. Cyber security solutions should be 
comprehensive and capable of being extended or upgraded in response to 
changes to the threat or technological environment. The technical 
approach to cyber security should include:
  --A summary of the cyber security risks and how they will be 
        mitigated at each stage of the lifecycle (focusing on 
        vulnerabilities and impact);
  --A summary of the cyber security criteria utilized for vendor and 
        device selection;
  --A summary of the relevant cyber security standards and/or best 
        practices that will be followed; and
  --A summary of how the project will support emerging smart grid cyber 
        security standards.
    DOE intends to work with those selected for award but may decide 
not to make an award to an otherwise meritorious application if that 
applicant cannot provide reasonable assurance that their cyber security 
will provide protection against broad-based systemic failures in the 
electric grid in the event of a cyber security breach.
    The following technical merit review criteria will be used in the 
evaluation of applications and in the determination of the SGIG project 
awards. The relative importance of the four criteria is provided in 
percentages in parentheses.
  --Adequacy of the Technical Approach for Enabling Smart Grid 
        Functions (40 percent)
  --Adequacy of the Plan for Project Tasks, Schedule, Management, 
        Qualifications, and Risks (25 percent)
  --Adequacy of the Technical Approach for Addressing Interoperability 
        and Cyber Security (20 percent)
  --Adequacy of the Plan for Data Collection and Analysis of Project 
        Costs and Benefits (15 percent)

                  SMART GRID RESEARCH AND DEVELOPMENT

    OE's fiscal year 2010 budget request contains a new line item to 
support a suite of activities to develop the next generation of smart 
grid technologies, tools, and techniques. While the FOAs are intended 
to accelerate existing systems, the R&D activities are aimed at new 
inventions, discoveries, and technology advances. We view grid 
modernization as a multi-decade process based on private sector 
investments and business innovations across a variety of markets and 
applications. This will be a highly dynamic process and will require 
agility and flexibility in the way OE manages its activities. There is 
direct linkage between the FOAs and the R&D, as lessons learned during 
implementation will generate use cases, best practices, and experience 
that will guide R&D directions and priorities.
    Smart grid R&D priorities for fiscal year 2010 include:
  --Integrated communications,
  --Advanced components,
  --Advanced control methods,
  --Sensing and measurement, and
  --Improved interfaces and decision support.
    Integrated communications involves projects to create an open 
architecture and support interoperability for a ``plug&play'' smart 
grid environment. Advanced components include projects to develop power 
electronics devices for high-voltage energy conversion and flow 
control. Advanced control methods includes projects to provide 
operating and control solutions for integrating renewable and 
distributed energy systems into the electric transmission and 
distribution system, including plug-in electric vehicles. Sensing and 
measurement includes projects for advanced devices to evaluate system 
conditions and feed back such information to both grid operators and 
consumers for optimized operations and controls. Improved interfaces 
and decision support includes projects to develop tools for grid 
operators and consumers to use information streams from smart grid 
devices for real-time decision making and diagnostics.
    Another R&D priority for 2010, and one that is closely related to 
and coordinated with our work in smart grid R&D, involves Clean Energy 
Transmission and Reliability and projects involving the deployment of 
Phasor Measurement Units (PMUs). OE leadership has been instrumental in 
the development and deployment of this technology and in the formation 
of the North American SyncroPhasor Initiative (NASPI), which involves 
OE collaboration with the Nation's leading electric utilities, power 
transmission companies, independent system operators, universities, 
national laboratories, and the North American Electric Reliability 
Corporation. The NASPI mission is to improve power system reliability 
and visibility through wide area measurement and control. 
Synchrophasors are precise grid measurements now available from 
monitors called phasor measurement units (PMUs). PMU measurements are 
taken at high speed (typically 30 observations per second--compared to 
one every 4 seconds using conventional technology). Each measurement is 
time-stamped according to a common time reference. Time stamping allows 
synchrophasors from different utilities to be time-aligned (or 
``synchronized'') and combined together providing a precise and 
comprehensive view of the entire interconnection. Synchrophasors are 
providing greater insight into system operating conditions and hold the 
promise to enable a better indication of grid stress. An important goal 
is the use of PMU-derived information to trigger corrective actions 
that maintains reliable system operation.
    A map of PMU installations shows growing numbers across North 
America including the Eastern Interconnection, Western Interconnection, 
and the ERCOT Interconnection (which comprises most of Texas). Devices 
called phasor data concentrators aggregate PMU data for use by system 
operators for wide area visibility and measurements. There are 
significant computational challenges in organizing and analyzing phasor 
data and in developing models and analysis tools for grid operators and 
visualization and decision making support. Such models and tools are 
essential for making key system-level improvements, including:
  --Wide-area, real-time interconnection monitoring, visualization, and 
        situational awareness of precursors of grid stress e.g., phase 
        angles, damping;
  --Monitoring of key metrics and compliance with reliability 
        standards;
  --Translation of data and metrics into information dashboards for 
        operator action;
  --Model validation (e.g., dynamic models, load models);
  --Event analysis of root causes and forensics;
  --Small signal stability monitoring and oscillation detection;
  --Automated control actions--smart switchable networks;
  --Definition of ``edge'' and reliability margins for real-time 
        dynamic system management; and
  --Computation of sensitivities and analysis of contingencies.
    OE priorities in this area for fiscal year 2010 include development 
of prototype small signal monitoring tools for damping of 
characteristic grid oscillations, development of dynamics analysis 
capabilities for PMU-based networks, development of advanced 
visualization and decision making tools, assess possible PMU 
installations to monitor dynamics from wind and other variable sources 
of renewable generation, research in new algorithms and computational 
methods for solving complex power system problems, and assessments of 
human factors requirements for grid operators using operational 
simulations and scenario-based assessments.

                     OTHER RECOVERY ACT INITIATIVES

    While Smart Grid is receiving the majority of the OE Recovery Act 
funds, the Department is sponsoring other Recovery Act initiatives. 
Recognizing the crucial role our State partners play in any efforts to 
modernize the grid and enhance energy security, we are making grants 
available to State and local governments to help them meet the 
challenges they face. One initiative focuses on improving State 
emergency preparedness planning and energy assurance capabilities, 
helping to ensure quick recovery and restoration from any energy supply 
disruptions. These awards were announced on August 12, and the State of 
Hawaii has been notified that it will receive $318,196 under this 
initiative.
    Another initiative will provide grants to State public utility 
commissions, which play a key role in regulating and overseeing new 
electricity projects, including smart grid developments, renewable 
energy and energy efficiency programs, and storage projects. The funds 
will be used by States and public utility commissions to hire new staff 
and retrain existing employees to accelerate reviews of the large 
number of electric utility requests expected under the Recovery Act. 
The application period for these grants closes on August 31, and we 
expect to make awards soon after.

                               CONCLUSION

    OE's smart grid activities are among our top priorities and 
crosscut virtually everything we do in electricity delivery and energy 
reliability. Our immediate attention is on the successful 
implementation of the two Recovery Act programs in smart grid 
investment grants and demonstrations. At the same time we are moving 
forward on smart grid R&D to accelerate development of the next 
generation of smart grid technologies, tools, and techniques. All of 
these efforts are aimed at modernizing the North American electric 
grid. We believe that grid modernization is paramount for achieving 
national energy, environmental, and economic goals for reductions in 
oil consumption and carbon emissions, as well as creation of new 
businesses and jobs for American workers.
    This concludes my statement, Mr. Chairman. Thank you for the 
opportunity to testify. I look forward to answering any questions you 
and your colleagues may have.

    Chairman Inouye. I thank you very much. As you've noted, 
because of our dependence upon fossil fuels, Hawaii has been 
experimenting with alternative energy for many years now. For 
example, ocean thermal energy conversion at a time when other 
States have never heard about it.
    We experimented with wind energy and used it on the North 
Shore of Oahu, and we've had much use out of solar energy, but 
we find that it's not quite sufficient, especially as we have 
the military here, which consumes a lot of energy.
    Which brings about the undersea cable--how much of these 
stimulus funds have we spent for that?
    Mr. Parks. I don't have that exact amount on that, Mr. Liu 
may have that. I believe it's around $7 million, but we could 
verify that when it comes to----
    Chairman Inouye. Do you know what the total cost would be?
    Mr. Parks. Of the inter-island cable?
    Chairman Inouye. Yes.
    Mr. Parks. We're--we continue to try to evolve that, we 
don't have a final bill. We have some estimates in that--it's 
in the hundreds of millions. My guess--there are several 
parameters that are not picked, yet, for example, what is the 
carrying capacity of that cable, how many islands does it truly 
connect, how many loops do we need--all of those technical 
things have not yet been answered and all affect price.
    And then we're seeing--with the price volatility on 
commodities like copper that, on any given day that price is 
changing, that we would get. Still, probably we're in the range 
of $600 to $800 million for a cable, as what we've identified, 
to date.
    Chairman Inouye. In other words, the funding challenge will 
be great?
    Mr. Parks. It's a huge funding challenge, and we're looking 
at opportunities to figure out how to do that. There are 
companies that will lend you the money to build and construct, 
but of course, want repayment for lending you that money to do 
that up front. And we are examining that.
    Ultimately, it will come back to ratepayers and taxpayers. 
In the analysis that we've done, we've said, if you do 
business-as-usual in the State of Hawaii, it's going to cost 
lots of money, we are exporting $7 or $8 billion a year to buy 
oil every year, so you've got to balance what's--how do you 
make that investment? And if you have to make that investment 
up front, how do you minimize the impact to the ratepayer, and 
get the maximum advantage out of the system?
    What we don't know, obviously, is the future price of oil. 
If it--our projections suggest that it will be cost effective 
to make the recommendations that we've made on the Hawaii clean 
energy initiative if oil stays above $75 a barrel. I think 
that's a reasonable bet to make, but it is a bet that will have 
to be made.
    Chairman Inouye. We have geothermal energy, which is 
something you don't have in most States, and I've been advised 
that the Big Island will be energy sufficient because of this, 
but they will have surplus, and they want to get into the 
undersea cable business, also.
    So, do you think that our geothermal energy is that much in 
abundance?
    Mr. Parks. The outer islands have enough to be 100 percent 
electricity self-sufficient. The transportation sector creates 
a little more difficulty because you need biofuels when you use 
electricity as we look at future options.
    So, given the cable capability, where Kauai is a little too 
deep, the channels between, to handle now. The Big Island, and 
Maui County could both export renewable energy to Oahu, using 
existing technology. Geothermal and bio-energy are both 
baseload technologies, so they're preferred technologies to the 
utility, because they know how to operate those within the 
system.
    The balance will have to be, again, what's the investment 
and the benefit that's realized in a timely way, and how does 
that--how does the load growth for things like electric 
vehicles or for--as population grows over the next few decades, 
how does that impact, again, the investment decisions?
    Chairman Inouye. Thank you very much, Mr. Parks, you've 
been very helpful----
    Mr. Parks. Thank you, sir.
    Chairman Inouye. But we'll be submitting a few more 
questions, if I may.
    Mr. Parks. Absolutely, sir.
    Chairman Inouye. And, Mr. Theodore Liu.

STATEMENT OF THEODORE E. LIU, DIRECTOR, HAWAII 
            DEPARTMENT OF BUSINESS, ECONOMIC 
            DEVELOPMENT AND TOURISM
    Mr. Liu. Good afternoon, Chair Inouye.
    Thank you very much for the opportunity of providing these 
comments on the progress of the State's obtaining energy 
funding from the American Recovery and Reinvestment Act.
    If I may, I'd like to start by going slightly off-topic of 
energy, but still on the topic of Federal assistance for 
stimulating our economy.
    The reason I was late for your hearing this morning, 
Senator, is that I was meeting with--together with Mike 
McCartney of HTA. The two largest Chinese travel companies that 
are in town, working on the inaugural direct flights from 
Beijing to Honolulu. And they had read about this hearing in 
the papers, and they asked me to specifically mention to you 
the role the Federal Government, the Departments of Homeland 
Security, State and Commerce in facilitating the obtaining of 
visas from a segment of travelers, high-end travelers that 
could represent thousands--if not tens of thousands--of new 
visitors to Hawaii, starting later on this fall. And that would 
be a tremendous boost to our economy, and the national economy, 
but clearly the Federal Government--they believe--has a role in 
helping facilitate that, too, and I wanted to make sure that I 
agreed with their request to transmit this to you.
    Chairman Inouye. The message has been received.
    Mr. Liu. Thank you. That's what they had hoped.
    Back on energy, the Recovery Act energy formula funding and 
competitive grant opportunities come at a uniquely opportune 
time for Hawaii. As Bill Parks has mentioned, since the 
Government and legislature announced Energy for Tomorrow in 
2006, and with the Hawaii clean energy initiative, announced 
early last year in partnership with the Federal Department of 
Energy, we have a real opportunity to transform our energy 
systems, and in so doing, bring about energy security, self-
sufficiency, economic vitality for the State, but also to act 
as a model for other States and nations.
    Because energy for tomorrow and HCI preceded the ARRA, we 
viewed the funding opportunities in that context, and through 
that prism, and these funding opportunities are indeed an 
opportunity for us to catalyze concrete action on what, 
heretofore may have only been plans, and to accelerate work on 
plans already in implementation over the last many years.
    In general, our plan is to deploy the Recovery Act energy 
formula grant, which is a subject of my testimony, to support 
Hawaii's energy transformation, already underway.
    In summary, in terms of formula energy grants, Hawaii 
expects to receive a total of $47.38 million--that's only for 
the formula grants--and it's made up of--and it's included in 
my written testimony, $25.93 million for the State energy 
program, $15.07 million through the energy efficiency and 
conservation block grants, of which $5.5 million goes direct to 
the counties, and $9.6 million comes to the State, $4.04 
million for the Weatherization Assistance Program, about 
$782,000 for the State electricity regulators assistance, 
$318,000 for enhancing our State government's energy assurance 
capabilities, and $1.236 million for State energy efficient's--
efficient appliance rebate programs. Again, Senator, for a 
total of $47.3 million for formula grants.
    Now, from the very beginning, through our discussions with 
the DOE and with your good office, we recognized that we were 
required to have a thoughtful and strategic and efficient plan 
to achieve the Recovery Act's purposes, and having had the 
benefit of HCI in place, we made reference to the activities 
already underway at the Federal Department of Energy, the 
National Labs, took advantage of a technical working group, 
because they had already been convened for the purposes of 
supporting HCI, talked to all of the existing organizations and 
agencies in town, including many supported by your office, that 
had existing programs underway, and endeavored to make full use 
of existing mechanisms and programs as a means of making sure 
that the funding efficiently and effectively moves into the 
market as soon as possible.
    As a result, we have a plan which we believe integrates 
multiple Hawaii energy sectors across multiple funding sources, 
is consistent with, and is embedded within the HCI framework, 
has the benefit of stakeholder input, and is capable of 
efficient and effective implementation.
    Now, our plan, which is submitted to you in writing, has a 
State energy office pursuing 25 separate programs funded by 
these 6 formula grants, the $47 million that I've referred to.
    Now, out of that, about $27.6 million is allocated to 13 
programs for energy efficiency, $6.65 million is allocated to 8 
programs for renewable energy, including 5, specifically, to 
support the undersea cable in the amount of $4.74 million, and 
that can be found in section 3.2.1 of our plan that was 
submitted to you, $4.25 million is allocated to 2 programs in 
transportation, and $1.1 million is allocated to programs on 
energy assurance, again, for a total of $47.38 million.
    Now, I will note, Senator, that out of that $47.38 million 
expected amount, we have been allocated $14.985 million--
approximately $15 million, to date. And that consists of $12.96 
million--about $13 million, or 50 percent of our State energy 
program. That was allocated on July 10, 2009, about 5 weeks 
ago. And $2.02 million--or about 50 percent of our 
Weatherization Assistance Program, which was released on August 
12, 2 weeks ago, 2009. So those are the two funding amounts, 
totaling about $15 million that we've actually--we haven't 
received, but it's been allocated to us for us to draw down on 
from the Federal Department of Energy.
    We've made applications for the rest of our formula grant 
monies, including the energy efficiency conservation block 
grants. And, Senator, I know that the Department of Energy is 
looking at those, together with thousands of other 
applications, nationwide, so we're all--together with other 
States and jurisdictions--waiting for notification on those 
grant monies.
    Even though we only received this $15 million about 1 month 
ago, total, 1 month and about 2 weeks ago, I am pleased to 
report that due to the planning already undertaken by us 
through HCI, last week we signed an agreement with the public 
utility commission to allocate a total of $10.4 million to 
SAIC, which is the newly established energy efficiency utility 
of the State to undertake a broad range of energy efficiency 
retrofits in our Hawaii residents' homes, particularly in low-
income communities. So, about $10.4 million has already been 
obligated, pursuant to an agreement utilizing an existing 
channel of the new energy efficiency utility.
    Over the next 2 to 4 weeks, we anticipate issuing RFPs, 
Senator, for about $4.7 million for those five contracts that 
covered the undersea cable, which includes EIS work, and 
another $1.2 million for five additional contracts for energy 
efficiency. So we are moving right around, sir, in trying to 
make sure that as soon as we get notification from the DOE of 
our allocations, that we get those monies into programs, into 
existing mechanisms that can get those monies in the market 
right away.
    Let me just end with a short summary of what we believe 
will be the impacts--the results and impacts of spending only 
this $47.9 million. And again, we have a mix, we believe, of 
direct, short-term impact--such as our funding for direct 
energy efficiency retrofits in our residents' homes, especially 
low income ones--and also longer term indirect impact, such as, 
for instance, if we are able to facilitate the development of 
the inter-island cable, it can lead to between 400 megawatts to 
1 gigawatt of renewable energy generated and transmitted 
between our islands.
    But based on our current analysis, implementation of the 
projects included in our expenditure plan will achieve the 
creation of 515 jobs. This is using the DOE's set national 
formula of $92,000 per job. We could be above that, we could be 
below that, but we decided that we're going to use the DOE's 
set formula.
    We believe for the energy efficiency programs I've 
mentioned, 5,000 residences, Senator, particularly in low-
income areas will be impacted with the plan's energy efficiency 
programs, and we estimate that that will generate $77.5 million 
in savings for the residents, for the actual residents of those 
homes, over the life cycle of those retrofits.
    We also anticipate that 5 million square feet of businesses 
and government buildings will achieve an average of 30 percent 
energy savings as a result of the energy savings of these 
formula grants, again, that's businesses as compared to 
residences, which we believe will have 5,000 homes affected, 
and we believe that we will tip. Renewable energy projects are 
expensive, and this is not going to pay for a lot of renewable 
energy projects. Our strategy is to use the formula monies to 
select those projects that are on the cusp of getting done, on 
the cusp of becoming steel in the ground, and try to tip them 
toward being done, as opposed to only being planned.
    And we're talking to our biggest sector in the State, 
Waikiki, about a district sea water air-conditioner cooling 
system, which we might invest in to buy-down the up-front cost, 
which would maybe enable them to save 100,000 megawatt hours 
and $25 million annually if that project gets done as a result 
of buying down the initial costs, and we're also--intend 
installing between three to four renewable energy projects 
putting about 20 megawatts of renewable projects online, and 
producing about 6,000 megawatt hours a year in renewable energy 
through these tipping point investments.
    In transportation, our funding will enable the early 
adoption of 650 alternate fuel vehicles, including electric 
vehicles, and 650 charging stations, in the short term, leading 
we hope, to the long term of Chevy Volt, of Better Place, of 
all of the companies that are producing advanced transportation 
vehicles coming to Hawaii and making us a rollout platform for 
their new technologies.
    And finally, on the ARRA funding, if we are able to tip 
that cable project into fruition, we believe that that will 
draw a total private sector investment of close to $1.5 to $2 
billion, and more importantly, Senator, with the associated 
wind farms, we've estimated that if we do this project, we will 
avoid a projected $5.7 billion of exports of our cash to buy 
oil, has been displaced.
    So, the long-term, indirect benefits are significant. If we 
are able to deploy the ARRA funds both directly and indirectly 
as this plan comes for.
    So, again, ARRA comes at a really opportune time, it can 
really accelerate all of the work that Bill Parks at DOE and 
our Federal partners have been so helpful in helping us do, and 
we look forward to significant tangible results, and to be able 
to report that to you on a regular basis.
    Thank you for the opportunity.
    [The statement follows:]

                 Prepared Statement of Theodore E. Liu

    The State Energy Office of the State of Hawaii Department of 
Business, Economic Development and Tourism appreciates the opportunity 
to submit to the Committee on Appropriations of the United States 
Senate the below information on Hawaii's plans for and status of 
expenditures of energy funding under the American Recovery and 
Reinvestment Act of 2009 (AARA).
    This submission and the Department's oral comments will cover only 
the energy formula grant portions of ARRA. Competitive energy grant 
opportunities will be covered by others before your Committee, 
including the U.S. Department of Energy.
    This submission is organized into the following sections:
    Section 1: Hawaii's Total Energy Formula Funding under the American 
Recovery and Reinvestment Act of 2009.
    Section 2: Strategic Approach for Building the Expenditure Plan.
    Section 3: Formula Funding Expenditure Project Plan and Status.
 1. hawaii's total energy formula funding under american recovery and 
                    reinvestment act of 2009 (arra)

------------------------------------------------------------------------
       Formula Energy ARRA
          Solicitations            Reference Number        HI Amount
------------------------------------------------------------------------
Recovery Act--Energy Efficiency   DE-FOA-0000013....  $15.07 million to
 and Conservation Block Grants--                       State and
 Formula Grants.                                       counties
Weatherization Formula Grants--   DE-FOA-0000051....  $4.04 million
 Recovery Act.
Recovery Act--State Energy        DE-FOA-0000052....  $25.93 million
 Program.
Enhancing State Government        DE-FOA-0000091....  $318,000
 Energy Assurance Capabilities
 and Planning for Smart Grid
 Resiliency.
State Electricity Regulators      DE-FOA-0000100....  $782,000
 Assistance.
State Energy Efficient Appliance  DE-FOA-0000119....  $1.236 million
 Rebate Program.
                                                     -------------------
      Total Formula Funding.....  ..................  $47.38 million
------------------------------------------------------------------------

    The purposes of ARRA energy funding are ``[T]o preserve and create 
jobs and promote economic recovery; to assist those most impacted by 
the recession; to provide investments needed to increase economic 
efficiency by spurring technological advances in science and health; to 
invest in transportation, environmental protection, and other 
infrastructure that will provide long-term economic benefits; and, to 
stabilize State and local government budgets, in order to minimize and 
avoid reductions in essential services and counterproductive State and 
local tax increases.''
1.1. ARRA--Energy Efficiency and Conservation Block Grants (EECBG) (DE-
        FOA-0000013)
    1.1.1. Purpose: The purpose of the EECBG program is to assist 
eligible entities in creating and implementing strategies to achieve 
the following:
  --Reduce fossil fuel emissions in a manner that is environmentally 
        sustainable and, to the maximum extent practicable, maximize 
        benefits for local and regional communities.
  --Reduce the total energy use of the eligible entities.
  --Improve energy efficiency in the building sector, the 
        transportation sector, and other appropriate sectors.
    1.1.2. Status: Unlike SEP, for which the DOE had 56 grants to 
award, the EECBG program has over 2,000 grants to award. Hawaii's State 
and four county submissions have been received and are being reviewed 
by the DOE. No monies have been released; no date for release has yet 
been communicated.
1.2. Weatherization Formula Grants--Recovery Act (DE-FOA-0000051)
    1.2.1. Purpose: The Weatherization Assistance Program (WAP) 
objective is to increase the energy efficiency of dwellings owned or 
occupied by low-income persons, reduce their total residential 
expenditures, and improve their health and safety. The WAP priority 
population is persons who are particularly vulnerable such as the 
elderly, persons with disabilities, families with children, high 
residential energy users, and households with high-energy burdens.
    1.2.2. Status: The Hawaii WAP was awarded to the 50 percent level 
on August 12, 2009.
1.3. ARRA--State Energy Program (DE-FOA-0000052)
    1.3.1. Goals: The existing goals of the long-standing State Energy 
Program (SEP) are to:
  --Increase energy efficiency to reduce energy costs and consumption 
        for consumers, businesses and government.
  --Reduce reliance on imported energy.
  --Improve the reliability of electricity and fuel supply and the 
        delivery of energy services.
  --Reduce the impacts of energy production and use on the environment.
    The goals of the additional ARRA funds allocated to the SEP are to:
  --Stimulate the creation or increased retention of jobs.
  --Save energy (kWH/therms/gallons/BTUs/etc.).
  --Increase energy generation from renewable sources.
  --Reduce greenhouse gas emissions.
    1.3.2. Status: Hawaii's SEP initial proposal, consisting of the 
required list of projected activities, was submitted to the Department 
of Energy on March 20, 2009. The initial award of 10 percent of the 
projected Hawaii ARRA SEP amount was received on April 21, 2009. The 
State's Comprehensive Application was submitted May 23, 2009. Fifty 
percent of the State's award was received on July 10, 2009.
1.4. Recovery Act--Enhancing State Government Energy Assurance 
        Capabilities and Planning for Smart Grid Resiliency (DE-FOA-
        0000091)
    1.4.1. Purpose: The following activities shall be addressed when 
structuring projects under this funding opportunity:
  --Create in-house expertise at the State level on energy assurance 
        planning and resiliency, focusing on Smart Grid.
  --Develop new, or refine existing, Energy Assurance Plans to 
        incorporate response actions to new energy portfolios, 
        including Smart Grid technologies.
  --Revise appropriate State policies, procedures and practices to 
        reflect the Energy Assurance Plans.
  --Develop and initiate a process or mechanism for tracking the 
        duration, response, restoration, and recovery time of energy 
        supply disruption events.
  --Train appropriate personnel on energy infrastructure and supply 
        systems and the content and execution of energy assurance 
        plans.
  --Conduct energy emergency exercises (intra and interstate) to 
        evaluate the effectiveness of the energy assurance plans.
    1.4.2. Status: Hawaii's Energy Assurance proposal was submitted to 
the Department of Energy on July 27, 2009. Award has been announced, 
but not yet received.
1.5. State Electricity Regulators Assistance Funding (DE-FOA-0000100)
    1.5.1. Purpose: ARRA funding for electricity sector activities and 
initiatives will significantly affect utility investment in the 
electric power sector. State Public Utility Commissions will be 
involved in implementing key facets of ARRA electricity-related 
initiatives. To ensure that PUCs can meet the increased demands caused 
by the increased workload required to fully address the electricity 
sector initiatives included in the ARRA, DOE intends to make funding 
available to PUCs to hire additional staff so they can ensure 
appropriate technical expertise will be dedicated to regulatory 
activities pertaining to ARRA electricity-related initiatives.
    The intent of the funds made available through the ARRA State 
Electricity Regulators Assistance Initiative is to supplement, not 
supplant, normal State appropriations for PUC staffing, expressly for 
the purpose of addressing the significant increase in PUC workload 
created by ARRA electricity-related initiatives.
    1.5.2. Status: The SERAF Proposal is due August 31, 2009. The 
Public Utilities Commission (PUC) will be applying for this grant, and 
the State Energy Office is coordinating with the PUC.
1.6. Recovery Act--State Energy Efficient Appliance Rebate Program (DE-
        FOA-0000119)
    1.6.1. Purpose: The Appliance Rebate Program Objectives are:
  --Save energy by encouraging appliance replacement through consumer 
        rebates.
  --Make rebates available to consumers.
  --Enhance existing rebate programs by leveraging ENERGY STAR national 
        partner relationships and local program infrastructure.
  --Keep administrative costs low while adhering to monitoring and 
        evaluation requirements.
  --Promote State and national tracking and accountability.
  --Use existing ENERGY STAR consumer education and outreach materials.
    1.6.2.Status: Hawaii's ENERGY STAR initial proposal was submitted 
to the Department of Energy on Jul 31, 2009. The Comprehensive 
Application is due October 15, 2009. Ten percent award is expected 
September 30, 2009, with final award expected November 30, 2009.
        2. strategic approach for building the expenditure plan
    In January 2008, the State of Hawaii, in partnership with the U.S. 
Department of Energy (DOE), announced a historic initiative with the 
objective of achieving a fundamental transformation of the State's 
energy system. The Hawaii Clean Energy Initiative (HCEI) set the 
ambitious goal of moving Hawaii to 70 percent clean energy by 2030. The 
comprehensive thinking, analysis and planning to achieve this 70 
percent clean energy objective preceded ARRA and has been underway for 
the last 20 months. The HCEI objective and related activities and 
projects provided the overarching policy and implementation framework 
for planning the expenditure of ARRA's energy funding. In turn, the 
ARRA energy funding has the potential to catalyze significant progress 
in many of the components of HCEI. Achieving this alignment required 
discussion among the HCEI partners and stakeholders.
    Hawaii's ARRA funding expenditure plan was developed after broad 
consultation to ensure that it supplemented HCEI and other related 
initiatives already underway.
    Specific attention was paid to the DOE's and national laboratories' 
annual operating plans to ensure that the State's spending plan 
complemented but did not duplicate intended Federal expenditures. 
Beginning in February and continuing through July 2009, meetings were 
held with energy sector stakeholders to request input on priorities and 
to build awareness of the spending plans. The plan also received input 
and guidance from HCEI Working Groups' recommendations and from HCEI 
partner projects. Potential technical support from the national 
laboratories was also factored in.
    Central to this planning effort was focus on augmenting programs 
and processes already in place in order to speed deployment of the 
funds into the market. In April, meeting of Hawaii's key energy 
community members and agencies which are funding energy projects was 
held to construct a ``landscape'' of existing initiatives into which 
ARRA funding could be deployed. Briefings were provided by the 
Department of Defense, the University of Hawaii, the Pacific 
International Center for High Technology Research, electric and gas 
utilities, and State agencies such as the Department of Accounting and 
General Services and the Department of Hawaiian Home Lands, among 
others. The existing goals and budgets of these agencies were taken 
into consideration when drafting the ARRA plan in order to avoid 
redundant efforts.
    The objective has been to create a plan which integrated multiple 
Hawaii energy sectors, each of which has multiple formula funding 
sources. Planning and analysis focused on identifying opportunities to 
enhance projects which fit Hawaii's strategic plan, which have a sound 
basis and rationale, and which can be implemented quickly to obtain 
measurable results. The complexity of Hawaii's energy system and 
programs makes a comprehensive effort challenging, but a thoughtful and 
inclusive approach, such as what was undertaken in developing this 
plan, is essential to its success.
    The initial SEP submission, in March 2009, was approved by Governor 
Lingle, as was the final SEP submission in May. The SEP allows some 
flexibility to reallocate funding under certain circumstances.
         3. formula funding project expenditure plan and status

              FORMULA FUNDING PROJECT SPENDING PLAN SUMMARY
------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
Efficiency Programs.....................................     $27,652,685
Renewable Programs......................................      $6,650,000
Transportation Programs.................................      $4,250,000
Energy Assurance Programs...............................      $1,100,000
------------------------------------------------------------------------

3.1. Energy Efficiency
    3.1.1. A total of $6,500,000 of ARRA SEP funding will be allocated 
to a Government and Residential Efficiency Program (GREP) that targets 
energy efficiency retrofits for State, county, and residential 
buildings. This includes upgrading energy efficiency measures such as 
lighting, solar water heating, and metering devices to inform occupants 
of their energy consumption on an instantaneous basis. Of this 
$6,500,000, $6,200,000 is allocated to the new Public Benefits Fund 
Administrator (PBFA) Hawaii Energy Efficiency Program (HEEP) programs 
for Honolulu, Hawaii, and Maui counties, and $300,000 is allocated to 
the Kauai Island Utility Cooperative (KIUC) for the county of Kauai. 
Specific breakdown as follows:
    3.1.1.1. $762,500 of ARRA SEP funding will be allocated for the 
Commercial and Industrial Customized Rebate (CICR) program of the HEEP, 
a flexible program appropriate for the government (State and county) 
portion of this ARRA SEP funding. This program objective is to provide 
rebates for bundled technologies customized for specific customer 
needs. The customized approach also will allow rebates for technologies 
not on the standard list (such as efficient air conditioning equipment) 
of technologies. This funding will ``buy-down'' a portion of costs for 
government and create jobs in the construction and remodeling trade 
sectors. Importantly, the ARRA SEP amount will be matched by 
approximately $2.2 million non-Federal funds from the PBFA.

    ----------------------------------------------------------------

    CICR--Non-Profit and Government Direct Install Lighting Program
    Project Description:
  --Direct Install of Office Lighting Retrofits to Government 
        Organizations.
    --Retrofit of up to 15 Fixtures with Low-Wattage T8s and High 
            Performance ballasts per project.
    --Installation of 2 LED Exit Signs.
    RFP will be issued to Trade Allies to find and install equipment to 
qualify participants. Media announcements will be made to find 
qualified participants

    ----------------------------------------------------------------

    ----------------------------------------------------------------

                             ENERGY SAVINGS
------------------------------------------------------------------------
                                                   kW            kWh
------------------------------------------------------------------------
First Year..................................           346     1,642,323
Life of the measure.........................  ............    30,600,881
------------------------------------------------------------------------

    ----------------------------------------------------------------

    ----------------------------------------------------------------

                              COST SAVINGS
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Per Electrical Unit Cost (July 2009)......................     $0.19/kWh
Annual Energy Cost Savings................................      $313,684
Lifecycle Energy Cost Savings.............................    $5,844,768
------------------------------------------------------------------------

    ----------------------------------------------------------------

    ----------------------------------------------------------------

                           COST EFFECTIVENESS
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
$/kWh First Year Saved....................................       $0.3714
BTU Saved/$1,000 Spent (>10 Mil.).........................    29,930,665
Purchases Motivated.......................................      $610,000
$/kWh Life of Measures....................................       $0.0278
Life of Measures BTU Saved/$1,000 Spent (>10 Mil.)........    76,474,826
------------------------------------------------------------------------

    ----------------------------------------------------------------

    ----------------------------------------------------------------

                                 BUDGET
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
ARRA SEP Funding...........................................     $762,500
Hawaii Energy Efficiency Program Incentive Expenditure.....      $87,143
Hawaii Energy Efficiency Program Match.....................   $2,100,000
                                                            ------------
      Total Program Spend..................................   $2,949,643
------------------------------------------------------------------------

    ----------------------------------------------------------------

    ----------------------------------------------------------------

                               EMPLOYMENT
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
9.2 FTE Jobs Created...................  1 job per 92,000 ARRA funding
                                          per DOE job creation formula
------------------------------------------------------------------------

    ----------------------------------------------------------------

    3.1.1.2. $5,437,500 ARRA SEP funding allocated to the Energy 
Solutions for HEEP's Home (ESH) program, targeted at the residential 
sector. Its purpose is to encourage residential customers to reduce 
their home electricity consumption by increasing efficiency through 
audits, equipment tune ups and the replacement of older, less efficient 
appliances with more energy efficient models, including ENERGY STAR 
rated lighting, cooling and other appliances. This program will 
directly reduce energy costs for consumers.

    ----------------------------------------------------------------

 REWH--Residential Solar Water Heater Revolving Fund Low Interest Loan
    Project Description:
  --Zero down, $58 per Month, 48-Month Loans for Solar Water heaters
    --Family Sizes of 4 or more;
    --90 percent ($4,095) of Federal and State Tax Refund used as 
            Payback Balloon Payment at 12th Month;
    --During delivery, install Energy Savings package of water and 
            lighting efficiency devices;
    --1.5 percent Interest to cover Bank Administration Cost;
    --$7,000 average System cost; 550 solar water systems installed via 
            initial funding; 3,918 solar waste systems over life of the 
            program;
    --Initial loans by PBFA will total $3,850,000; with expected (10 
            percent) defaulted loans, expect to be able to loan out 
            $27,400,000 over life of program.

    ----------------------------------------------------------------

    ----------------------------------------------------------------

             ESH--Residential Home Usage Monitoring Systems
    Project Description:
  --Direct Install Home Usage Wireless Monitors;
  --Statistically selected homes in Hawaii; and
  --Installation of Energy Savings package of 5 CFLs, 1 LED, 2 
        Showerheads, 3 Aerators.

    ----------------------------------------------------------------

                             ENERGY SAVINGS
------------------------------------------------------------------------
                                                      kW         kWh
------------------------------------------------------------------------
First Year.......................................      437     2,761,695
Measure Lifecycle Savings........................    2,331    85,576,136
------------------------------------------------------------------------

    3.1.1.3. $300,000 of ARRA SEP funding is allocated to KIUC for 
customer energy efficiency rebate programs for the County of Kauai for 
government and residential programs on Kauai. This expenditure is 
expected to have an equivalent impact as funding expended via the PBFA 
in 3.1.1.2 and 3.1.1.3.
    Using existing programs speeds the time of getting funding into the 
marketplace and communities, and leverages the contract and 
infrastructure already in place for managing these programs. The Demand 
Side Management programs are well structured to process SEP funding for 
efficiency programs; the PUC is very supportive and is amending its 
contract with the PBFA/SAIC to incorporate ARRA funds for energy 
efficiency improvements, and supports using the KIUC DSM Program. The 
PBFA/SAIC also is enthusiastic in implementing these programs. These 
funds will meet the objectives of ARRA of reducing energy consumption 
for government, businesses, and residents, as well as creating jobs, 
especially via CICR.
    3.1.2. $3,800,000 of Weatherization Assistance Program (WAP) 
funding will be combined with $500,000 of ARRA SEP funding and 
approximately $250,000 of PBFA funding to ``weatherize'' low income 
homes. The State Energy Office has worked with the WAP under the State 
Department of Labor and Industrial Relations (DLIR) Office of Community 
Services (OCS) to collaborate with the PUC and Hawaii Energy Efficiency 
Program to use their current contract with nonprofits to install solar 
water heaters and compact fluorescent lights (CFLs), alongside the 
audit program conducted by the Hawaii Energy Efficiency Program. OCS's 
original contract and program included only Solar Water Heaters and 
CFLs; the DOE asked for additional measures. HEEP is contributing 
audits in conjunction with OCS measures, and OCS requested additional 
support from State Energy Office. Of the list of appliance replacements 
recommended by DOE, the State Energy Office has recommended OCS focus 
on ENERGY STAR refrigerators coupled with a mandatory refrigerator 
disposal program, for simplicity and impact to household energy 
consumption. This program is expected to ``weatherize'' a minimum of 
750 low income homes. According to OCS, 37 percent of Hawaii homes are 
eligible for this benefit, with over 35 percent average electricity 
bill savings per household expected.

    ----------------------------------------------------------------

                  Hawaii Joint Weatherization Program
    Project Description:
  --750 low income homes will receive:
    --Solar Water Heater (funded by WAP);
    --Residential lighting efficiency measures (funded by WAP);
    --Residential appliances (funded by SEP); and
    --Audit and 1 year verification monitoring (funded by PBFA).

    ----------------------------------------------------------------

    3.1.3. $200,000 of ARRA SEP funding to co-invest in the Waikiki Sea 
Water Air Conditioning project startup. The start-up phase will focus 
on Waikiki and will expedite implementation, attract financing, and 
provide specific information for high efficiency/renewable energy 
application of sea water air conditioning for Waikiki hotels, the 
Hawaii Convention Center, and other nearby appropriate facilities. 
These funds will be ``matched'' by an expected $400,000 of private and 
other Federal funding. Funding this start-up will accelerate this 
project moving from concept to construction.
    3.1.4. $742,000 ARRA SEP funding allocated to energy efficiency 
assistance for local businesses, including in the hotel sector. This 
program will ``buy-down'' the up-front costs of local businesses and 
hotels making decisions on the energy efficient investments. Through 
contracts with local energy engineering firms, the State Energy Office 
will provide technical assistance and information on ENERGY STAR, LEED, 
or general energy efficient practices and equipment. Break-down of this 
amount is as follows:
    3.1.4.1. $75,000 of ARRA SEP funding allocated to the Hospitality 
ENERGY STAR Program to certify and verify Hawaii hotels as ENERGY STAR. 
This will provide technical assistance to hotels in response to the 
request of hotel engineers and managers needing guidance to reach 
ENERGY STAR label, certification and verification as needed; and 
provided financing information and assistance to drive energy 
efficiency into the hospitality sector. The ENERGY STAR designation is 
well-recognized and highlights those hotels conservation measures and 
provides a competitive impetus for those that have not. Many hotels 
lack the staffing and expertise to assess energy performance of their 
properties. Buildings that are certified ENERGY STAR are in the upper 
25 percent nationwide of buildings of similar type. Currently, there 
are seven hotels with ENERGY STAR awards and nine have participated in 
the State Energy Office's Green Business Program to incorporate green 
business practices such as energy efficiency and recycling. These 
hotels typically save 10-40 percent on energy use and 20 percent on 
water use. ENERGY STAR is a step up from our Green Business Program and 
requires meeting a national standard on energy efficiency for hotels.

    ----------------------------------------------------------------

                     Hawaii Hospitality ENERGY STAR
    12 Hotels projected to achieve ENERGY STAR status:
  --2 million square feet of floor space rated ENERGY STAR (top 25 
        percent in country)
    --10-40 percent reduction in energy consumption
    --20 percent reduction in water consumption

    ----------------------------------------------------------------

    3.1.4.2. $367,000 of ARRA SEP funding allocated to technical 
assistance for government and businesses. As with the above technical 
assistance for the Hospitality ENERGY STAR Program described above, 
this effort will provide technical assistance and training to State and 
county agencies, nonprofits, and businesses to meet ENERGY STAR 
Standards to accelerate adoption. Additionally, this effort will 
include technical assistance and training to building code officials to 
expedite the adoption of the updated building code, IECC 2009, which we 
are targeting for 30 percent above IECC 2006 which was recently adopted 
by the State Building Code Council. Technical assistance also may be 
provided to complement GREP and the Hospitality ENERGY STAR Program.

    ----------------------------------------------------------------

             Hawaii Energy Efficiency Technical Assistance
    Goal of reaching 30 percent above IECC 2006 standards over the next 
2 years:
  --15 new construction buildings,
  --15 major renovations, and
  --3 million square feet of floor space.

    ----------------------------------------------------------------

    3.1.4.3. $300,000 of ARRA SEP funding allocated to training and 
adoption of LEED Standards program, including LEED training for State 
employees and design professionals, green building technical assistance 
of State and other projects, data collection and analysis, and case 
studies development. This program will help accelerate adoption of LEED 
green building standards. As a result of our conducting training and 
technical assistance, there are now over 20 LEED Accredited 
Professionals who have taken the LEED exam, passed, and been 
credentialed. Previous to our providing training, there was only one 
State employee who was a LEED Accredited Professional. There are now 
over 770 LEED APs in Hawaii and 147 LEED registered projects; prior to 
our providing training to design professionals throughout the State 
there were only about 50 LEED APs and about 16 LEED registered 
projects. Therefore, more personnel are knowledgeable in implementing 
LEED buildings which can be as much as 30 percent more efficient than 
buildings not designed to LEED. The estimated outcome of this project 
will be increasing the number of LEED Accredited Professional to 1500 
and 300 LEED registered projects, which will be 30 percent more energy 
efficient than today's energy code projects.

    ----------------------------------------------------------------

                    LEED Standards Training Program
    Goal of training next generation of architects and engineers for 
meeting HLS 2009 Act:
  --155 Energy Efficiency Portfolio Standard:
    --1,500 LEED Accredited Professionals
    --400 LEED registered projects

    ----------------------------------------------------------------

    3.1.5. $3,000,000 of ARRA Block Grant funding allocated to the 
State of Hawaii Department of Hawaiian Home Lands will implement the 
``Homestead Energy Program.'' DHHL anticipates partnering with a 
community development non-profit that is experienced in assisting DHHL 
homestead communities. The project will cover 400 homes and will be 
conducted over a period of 18 months consisting of: Conducting home 
energy audits and assessments; delivering energy efficiency and 
conservation education/training; and retrofitting/installing homes with 
solar water heating systems and CFLs.

    ----------------------------------------------------------------

                     EECBG Homestead Energy Program
    400 Homestead Homes, each with:
  --Home energy audits,
  --Solar Water Heaters,
  --CFLs, and
  --Energy Efficiency and Conservation Education and Training.

    ----------------------------------------------------------------

    3.1.6. $3,000,000 of ARRA Block Grant funding allocated to the 
State Department of Accounting and General Services' 10-building, 1 
million square foot performance contract which is estimated to cost 
about $35 million to make energy efficiency improvements. The project 
is designed to increase energy efficiency and building performance, 
accelerate reducing life cycle costs of operations, improve indoor 
environmental quality for occupants, address the deferred repair and 
maintenance backlog of projects, and leverage available annual cash 
flow from energy savings. The overall project will save about 
$73,000,000 over the next 20 years.

    ----------------------------------------------------------------

              EECBG DAGS Performance Contract Augmentation
    Funding for $3 million of a $35 million project:
  --10 buildings,
  --1 million square feet,
  --Over 30 percent energy savings, and
  --$73,000,000 savings over 20 years.

    ----------------------------------------------------------------

    3.1.7. $3,000,000 of ARRA Block Grant funding allocated to the 
Commercial and Industrial Customized Rebate (CICR) program of the HEEP, 
a flexible program appropriate for the government (State and county) 
and nonprofit building portion of this Block Grant funding. This 
program objective is to provide grants for bundled technologies 
customized for specific customer needs. The customized approach also 
will allow rebates for technologies not on the standard list (such as 
efficient air conditioning equipment) of technologies. This funding 
will reduce costs for non-profits and government agencies and create 
jobs in the construction and remodeling trade sectors. This ARRA Block 
Grant funds will also support the City and County of Honolulu, the 
County of Maui, and the County of Hawaii.
    3.1.8. $200,000 of ARRA Block Grant funding allocated to KIUC 
through DBEDT to offer the customer energy efficiency rebate programs 
for the County of Kauai for government and nonprofit buildings on 
Kauai. These funds are in addition to the $300,000 KIUC customer energy 
efficiency project listed in 3.1.1.3, but are included in the 
negotiations with KIUC and the PUC, and will be added to the project 
when available.
    3.1.9. $1,235,985 of the ARRA ENERGY STAR Program funding allocated 
to the State Energy Efficient Appliance Rebate Program (SEEARP) 
supporting GREP (see 3.1.1) for Honolulu, Maui, and Hawaii Counties 
(Kauai is supported by 3.1.8 above). Under GREP, this program will 
focus on swapping out inefficient home refrigerators (which represent 
about 14 percent of residential consumption) and replacing them with 
high efficiency ENERGY STAR refrigerators. Since many homes have two 
inefficient refrigerators, our program will offer two for one: 
Customers will turn in both refrigerators for a rebate to purchase an 
ENERGY STAR refrigerator. Our program will include mandatory recycling 
so the old refrigerators may not be reused. A home efficiency package 
of water conservation devises and compact fluorescents will be 
included. A second major program will include installing two ENERGY 
STAR ceiling fans in exchange for old air conditioning units. A home 
efficiency package will be included. Mandatory recycling will also be 
part of the program.
    The Initial Grant Application was submitted online by DBEDT on July 
31, 2009, to the USDOE via the Idaho Energy Office. The Comprehensive 
Application is due on October 15, 2009.

    ----------------------------------------------------------------

        State Energy Efficient Appliance Rebate Program (SEEARP)
    $1,235,985:
  --11.5 million kilowatt hours expected savings annually;
  --106.6 million kilowatt hours over life of project;
  --$21.3 million savings to consumers estimated over the life of the 
        measures; and
  --9 jobs created or retained.

    ----------------------------------------------------------------

    3.1.10. $5,474,700 in County Block Grant Funding ($737,800 for 
Hawaii County, $3,863,700 for Honolulu County, $267,900 for Kauai 
County, $605,300 for Maui County) of ARRA Block Grant funding will be 
provided directly to counties for energy efficiency and renewable 
energy projects in accordance with individual county needs and their 
individual applications subject to approval by the Department of 
Energy.
3.2. Renewable Energy
    3.2.1. $4,740,000 of ARRA SEP funding will be used to support the 
development of an inter-island undersea cable to interconnect the 
island of Oahu with one or more islands in the County of Maui. This 
project will require a significant amount of initial investment in the 
form of studies, data collection, analysis, and outreach, as well as 
staff with knowledge in permitting, transmission, project management, 
contracting, and grants. Break-down of contracted amounts is as 
follows:
    3.2.1.1. The Undersea Cable Support-Special Attorney General 
Contract will aid DBEDT in the development of the interisland cable by 
advising DBEDT on legal, regulatory, business, financing, and strategic 
decisions. This funding will reduce risk for the State and consumer, 
and shorten the timeline for getting the undersea cable in place. ARRA 
SEP funding of $200,000 are allocated for this contract.

    ----------------------------------------------------------------

                     Cable Special Attorney General
    Reduces legal risk for State and consumer in structuring cable 
contract.
    Reduce timeline for implementing cable plan of action.

    ----------------------------------------------------------------

    3.2.1.2. The Subject Matter Expert Contract will aid DBEDT in the 
development of the interisland cable by advising DBEDT in financing and 
procurement issues for the project and providing advice based on 
experience in development of undersea power transmission cables. This 
funding will reduce risk for the State and consumer, and shorten the 
timeline for getting the undersea cable in place. ARRA SEP funding of 
$500,000 are allocated for this contract.

    ----------------------------------------------------------------

                      Cable Subject Matter Expert
    Reduces technical and contractual risk for State and consumer in 
structuring cable contract and funding.
    Reduce timeline for implementing cable plan of action.

    ----------------------------------------------------------------

    3.2.1.3. The Request for Information (RFI) Contract will enable 
DBEDT and the Hawaiian Electric Company (HECO) to collect information 
regarding the financing and development of the interisland cable via a 
cable developers' conference. The results of the RFI will be used in 
the Request for Proposal (RFP) for the interisland cable. This will 
directly reduce ambiguity and cost for the cable. ARRA SEP funding of 
$50,000 are allocated for this contract.

    ----------------------------------------------------------------

                        Request for Information
    Reduces ambiguity for Request for Proposal.
    Reduces cost and time to construction of cable.

    ----------------------------------------------------------------

    3.2.1.4. Request for Proposal (RFP) Contract: DBEDT/HECO will 
develop the financial, technical, regulatory, and environmental 
requirements for the interisland cable. ARRA SEP funding of $500,000 
are allocated for this contract.

    ----------------------------------------------------------------

                          Request for Proposal
    Ensures legal, procurement, and technical requirements met in RFP 
solicitation.
    Reduces risk in solicitation.

    ----------------------------------------------------------------

    3.2.1.5. The Environmental Impact Statement (EIS) Contract will 
perform required environmental, cultural, and biological studies 
required for the development of the EIS for the interisland cable and 
the required grid upgrades on Oahu; support the drafting of required 
environmental assessment components; host stakeholder meetings on 
Molokai, Lanai, Maui, and Oahu. This will directly shorten the critical 
path for the deployment of the undersea cable. ARRA SEP funding of 
$3,690,000 are allocated for this contract.

    ----------------------------------------------------------------

                       Environmental Impact Study
    Directly works critical path issues while cable procurement process 
proceeds.
    Leverages State policy position for permitting and EIS analysis.

    ----------------------------------------------------------------

    3.2.2. To meet at least 40 percent of Hawaii's energy needs with 
renewable sources (solar, wind, wave, OTEC, geothermal, hydropower, and 
bioenergy) by 2030, multiple successful projects--properly sited, cost-
effective, effectively permitted and interconnected--will be needed. 
For projects to be successful, project developers, decision-makers, 
regulators, landowners, the media, and the public need access to 
credible, timely, up-to-date information on Hawaii's resources, 
barriers, requirements, technologies, expertise, successes, failures, 
and opportunities.
    3.2.2.1. $375,000 or ARRA SEP funding for an Online Permitting 
Systems, contracted with a local professional services provider to 
develop a coordinated, secure, on-line permitting portal for renewable 
energy projects. Successful examples exist in other States. Tasks 
include working with agencies in Federal, State and county government; 
developing front end and back end infrastructure; testing and 
implementation. This will provide a simple, easy to understand point of 
entry for renewable energy project developers, and shorten and simplify 
the permitting process for projects. Portal will provide an automated 
process for permit selection and coordination.

    ----------------------------------------------------------------

                        Online Permitting Portal
    Provides automated permit selection and coordination.
    Simplifies and provides transparency for permitting process for 
renewables.

    ----------------------------------------------------------------

    3.2.2.2. $200,000 of ARRA SEP funding allocated for initial funding 
of the Expedited Permitting Account to support the coordinated 
permitting process prior to the collection of developer fees. The funds 
will be used to cover up-front costs for expediting permitting projects 
including performing required engineering studies, data collection, and 
site assessments.

    ----------------------------------------------------------------

          Renewable Energy Facilitator Act 207 Initial Funding
    Provides initial funding for Act 207 processes.
    Reduces timeline for initial large renewable processes.

    ----------------------------------------------------------------

    3.2.2.3. $1,135,000 of ARRA SEP funding will be allocated to 
renewable energy project funding to accelerate the development of 
renewable energy projects by: (1) providing funding to ``tip'' 
renewable energy projects currently in the pipeline toward accelerated 
completion; and (2) documenting the projects, to provide information, 
guidance, and success stories to other project developers and the 
public.

    ----------------------------------------------------------------

                    Renewable Energy Project Funding
    Direct acceleration of 3-4 renewable energy projects.

    ----------------------------------------------------------------

3.3. Transportation Energy

    ----------------------------------------------------------------

             Transportation Energy Diversification Program
    Long Term Objective: 40 percent renewable energy by 2030.
    2012 Objective: at least 650 vehicles and charge stations in use; 
statewide non-petroleum refueling and recharging networks established; 
several makes and models of non-gasoline vehicles available.
    Foundation firmly established for non-petroleum vehicles and fuels.
    57 jobs created or retained directly through ARRA funding (per DOE 
job creation formula).

    ----------------------------------------------------------------

    3.3.1. $3,750,000 of ARRA SEP funding allocated to transportation 
energy diversification program to work with government and industry 
partners to develop a plan for rapid transformation of the energy 
demands of Hawaii's transportation sector. Grants will be provided to 
early adopters of commercially available technologies, including 
vehicles and infrastructure. Act 156 of the 2009 Legislature authorizes 
such a grant program. Result: 625 vehicle grants ($5,000 per grant) and 
chargers (estimated $1,000 cost per charger) funded. This allocation 
between grants and charging stations may be adjusted based on the needs 
of the market in this highly dynamic time for electric and other 
advanced technology vehicles.
    3.3.2. $500,000 of ARRA SEP funding allocated to alternative fuel 
vehicle and State infrastructure project will support State 
infrastructure and vehicle fleet demonstrations and transformation, 
providing funds for vehicles and infrastructure. Result: 25 vehicles 
(with $19,000 per vehicle) and 25 charge stations (at an estimated 
$1,000 per charging station) for the State.
3.4. Energy Assurance

    ----------------------------------------------------------------

                    Energy Assurance Formula Grants
    $1,100,000.
    Supplements not Supplants current State Energy Office and Public 
Utility Commission work.
    Increase expertise in regulatory and energy assurance issues 
related to Smart Grid.
    Provides for increased training and staff capability with new 
technology.

    ----------------------------------------------------------------

    3.4.1. $782,000 provided under State Electricity Regulators 
Assistance Funding (SERAF) will improve the State Public Utility 
Commission's (PUC's) ability to gain the expertise required to handle 
increasingly complex issues associated with Smart Grid technology and 
the associated regulatory issues. The SERAF program aims to ensure that 
PUCs can meet the increased demands caused by the increased workloads 
through the hiring of additional staff. This goes to ensure appropriate 
technical expertise will be dedicated to regulatory activities 
pertaining to Recovery Act electricity-related initiatives. The Hawaii 
PUC will be applying for this grant by the August 31, 2009 due date.
    3.4.2. $318,000 provided under Enhancing State Government Energy 
Assurance Capabilities and Planning for Smart Grid Resiliency Grant 
will create expertise at the State level on energy assurance planning 
and resiliency, focusing on Smart Grid; support development of energy 
assurance planning and plans; train personnel on execution of energy 
assurance plans; and fund energy emergency exercises to evaluate the 
effectiveness of the energy assurance plans. Hawaii's Energy Assurance 
proposal was submitted on July 27, 2009. The awards have been 
announced, but not yet received.
3.5. Projected Timeline
            Week of March 9
    Solicitation opens for ARRA SEP Grant (DE-FOA-0000052) applications 
on March 12, 2009. State of Hawaii allotted $25,930,000.
            Week of March 16
    DBEDT-SID submits Initial Application for ARRA SEP Grant (DE-FOA-
0000052) online on March 20, 2009.
            Week of March 23
    Solicitation opens for ARRA Block (Energy Efficiency and 
Conservation Block Grant) on March 26, 2009. State of Hawaii allotted 
$9,593,500.00.
            Week of April 20
    State of Hawaii receives 10 percent of its ARRA SEP grant 
($2,593,000) on April 21, 2009. ARRA SEP funds will be disburse in 
steps. This allotment funded administrative costs only.
            Week of May 18
    DBEDT-SID submits online the Comprehensive Application for ARRA SEP 
Grant (DE-FOA-0000052) on May 23, 2009.
            Week of May 25
    GREP: Develop project concepts. (3.1.1)
    CICR: Begin discussions with SAIC/HEEP on commercial and industrial 
customized rebate program for installation of non-standard energy 
efficiency technologies. (3.1.1.1)
    ESH: Begin discussions with SAIC/HEEP on energy solutions for the 
home program to encourage residential customers to reduce electricity 
consumption. (3.1.1.2)
    Hospitality ENERGY STAR: Narrow scope to possible projects. 
(3.1.4.1)
    Gov, Business, NP ES and Code Adoption: Determine possible scope. 
(3.1.4.2)
    Training and Adoption of LEED: Develop project concepts. (3.1.4.3)
    DHHL: Continue discussions on possible projects, funding. (3.1.5)
    DAGS: Continue discussions on possible projects, funding. (3.1.6)
    DBEDT Block: Begin preliminary discussion on scope, possible 
projects and partners. (3.1.7)
    CABLE EIS: Met with NOAA and MMS to discuss Federal permitting 
requirements for the Interisland Cable. (3.2.1.5)
            Week of June 1
    KIUC: Inquire about possible projects. (3.1.1.3 and 3.1.8)
    HSWAC: Determine project scenarios and partners. (3.1.3)
    Hospitality ENERGY STAR: Identify Federal requirements. (3.1.4.1)
    Gov, Business, NP ES and Code Adoption: Identify Federal 
requirements. (3.1.4.2)
    DHHL: Identify Federal requirements, evolve project concepts. 
(3.1.5)
    DAGS: Identify Federal requirements; develop project concepts. 
(3.1.6)
    DBEDT Block: Review Federal requirements. (3.1.7)
            Week of June 8
    GREP: Contact possible partners; discuss possible projects. (3.1.1)
    CICR: Continue discussions with SAIC/HEEP on rebate program for 
commercial and industrial customized installation of non-standard 
energy efficiency technologies. (3.1.1.1)
    KIUC: Develop project concepts. (3.1.1.3 and 3.1.8)
    WAP: Attend organizational meeting with OCS; discuss WAP grant 
requirements and ways DBEDT SID can assist. (3.1.2)
    Hospitality ENERGY STAR: Determine project partners and concepts. 
(3.1.4.1)
    Gov, Business, NP ES and Code Adoption: Identify stakeholders, 
partners and projects. (3.1.4.2)
    Training and Adoption of LEED: Identify project partners; focus 
scope. (3.1.4.3)
    DHHL: Focus project proposals and deliverables. (3.1.5)
    DAGS: Focus project proposals and deliverables. (3.1.6)
    DBEDT Block: Focus on viable projects and partners. (3.1.7)
    CABLE EIS: Meet with MMS, Army Corps, NOAA. (3.2.1.5)
            Week of June 15
    GREP: Identify stakeholders; expand strategic planning. (3.1.1)
    ESH: Continue discussions with SAIC/HEEP on energy solutions for 
the home program to encourage residential customers to reduce 
electricity consumption. (3.1.1.2)
    KIUC: Determine project requirements and Federal reporting. 
(3.1.1.3 and 3.1.8)
    WAP: Continue to refine project concepts with OCS. (3.1.2)
    HSWAC: Determine project scope and focus on realistic goals. 
(3.1.3)
    Hospitality ENERGY STAR: Focus scope on identifying hotels that 
most likely will qualify for ENERGY STAR award. (3.1.4.1)
    Gov, Business, NP ES and Code Adoption: Begin preliminary draft of 
RFP. (3.1.4.2)
    DHHL: Finalize project proposals. (3.1.5)
    DAGS: Finalize project proposals. (3.1.6)
    DBEDT Block: Expand possible sub-recipient scenarios. (3.1.7)
            Week of June 22
    DBEDT-SID submits online the application for the ARRA Block Grant 
(EECBG) on June 25, 2009.
    GREP: Continue to discuss wide range of projects for government, 
non-profits, and residential sectors. (3.1.1)
    KIUC: Begin discussing proposals with Randy Hee, KIUC Pres/CEO. 
(3.1.1.3 and 3.1.8)
    WAP: Assist OCS in focusing scope on energy efficiency and ``big 
bang'' items. (3.1.2)
    HSWAC: Begin preliminary draft of RFP. (3.1.3)
    Hospitality ENERGY STAR: Begin developing draft RFP. (3.1.4.1)
    Training and Adoption of LEED: Begin draft of RFP. (3.1.4.3)
    DHHL: Submit proposals to USDOE in EECBG application. (3.1.5)
    DAGS: Submit proposals to USDOE in EECBG application. (3.1.6)
            Week of June 29
    GREP: Identify Federal requirements. (3.1.1)
    ESH: Focus scope on energy solutions for the home program. 
(3.1.1.2)
    WAP: Discuss with OCS and PUC project plans. (3.1.2)
    Hospitality ENERGY STAR: Continue to evolve draft RFP. (3.1.4.1)
    DHHL: Prepare draft MOA. (3.1.5)
    DAGS: Prepare draft MOA. (3.1.6)
    DBEDT Block: Further discussions on expanded sub-recipient 
scenarios. (3.1.7)
            Week of July 6
    On July 10, 2009, USDOE informs us that Hawaii's ARRA SEP proposal 
was approved as amended. Hawaii received 40 percent more funding 
($10,372,000), bringing the total amount to 50 percent ($12,965,000).
    GREP: Begin developing RFP. (3.1.1)
    CICR: Focus scope with SAIC/HEEP on rebate program for commercial 
and industrial customized installation of non-standard energy 
efficiency technologies. (3.1.1.1)
    Gov, Business, NP ES and Code Adoption: Continue to develop draft 
RFP. (3.1.4.2)
    CABLE RFI: Develop RFI contract with HECO for the cable developers 
conference. (3.2.1.3)
            Week of July 13
    HSWAC: Continue work on RFP. (3.1.3)
    Training and Adoption of LEED: Continue to evolve RFP. (3.1.4.3)
    DHHL: Continue to work on draft MOA. (3.1.5)
    DAGS: Continue preparation of draft MOA. (3.1.6)
    SEEARP: State Energy Efficient Appliance Rebate Program (SEEARP) 
formula grant FOA announced on July 14, 2009. $1,235,985 allotted to 
State of Hawaii. SID begins work on the Initial Application, due on 
August 15, 2009. (3.1.9)
    CABLE: Form selection committee for SDAG contract. (3.2.1.1)
    CABLE RFI: RFI contract for cable developers conference sent to 
DBEDT ASO. (3.2.1.3)
            Week of July 20
    ESH: Identify Federal mandates with SAIC/HEEP on energy solutions 
for the home program to encourage residential customers to reduce 
electricity consumption. (3.1.1.2)
    Design discussions with OCS and PUC for Weatherization program. 
(3.1.2)
    SEEARP: Finalize partners and Initial Application. Oahu, Maui and 
Big Island counties targeted for projects in support of GREP. (3.1.1) 
(3.1.9)
    CABLE SDAG: Selected SDAG for the cable project--Cliff Higa from 
Kobayashi Sugita and Goda--Begin contract negotiations. (3.2.1.1)
            Week of July 27
    GREP: Discussions with the PUC and SAIC on program measures and 
procedures required to transfer funds for use of ARRA funds for 
government, nonprofits, and residential--completed (3.1.1)
    ESH: Develop project concepts with SAIC/HEEP on energy solutions 
for the home program to encourage residential customers to reduce 
electricity consumption. (3.1.1.2)
    WAP: Meeting with SAIC, PUC, OCS, HSEO, and CAPs to form working 
group--completed. (3.1.2)
    DBEDT Block: Discuss project potentials and procedures. (3.1.7)
    SEEARP: Submit Initial Application Idaho Energy Office on July 31, 
2009. (3.1.9)
    CABLE RFI: RFI contract for cable developers conference sent to SPO 
for sole source advertisement. (3.2.1.3)
            Week of August 3
    GREP: Prepare draft MOA for PUC and PBFA/SAIC review. Negotiate MOA 
with SAIC/PBFA and option of funding programs through PBFA. (3.1.1)
    CICR: Identify Federal mandates with SAIC/HEEP on rebate program 
for commercial and industrial customized installation of non-standard 
energy efficiency technologies. (3.1.1.1)
    KIUC: Discuss GREP with KIUC (Randy Hee, President/CEO)--completed. 
(3.1.1.3 and 3.1.8)
    Prepare draft MOA for OCS. (3.1.2)
    HSWAC: Review draft RFP; update for ARRA terms and conditions and 
reporting. (3.1.3)
    HSWAC: Review draft RFP with COS; incorporate ARRA terms, 
conditions and reporting. (3.1.3)
    DHHL: Revise draft MOA. (3.1.5)
    DAGS: Continue draft MOA for DAGS. (3.1.6)
    DBEDT Block: Begin preliminary draft MOA for SAIC. (3.1.7)
    CABLE RFI: RFI contract for cable developers conference sent to SPO 
for advertisement of sole source justification of using HECO. (3.2.1.3)
            Week of August 10
    GREP: PUC/PBFA review MOA. (3.1.1)
    ESH: Discuss proposals with SAIC/HEEP on energy solutions for the 
home program to encourage residential customers to reduce electricity 
consumption. (3.1.1.2)
    HSWAC: Complete draft RFP; evaluation committee proposal, 
evaluation forms and route for final review. (3.1.3)
    Hospitality ENERGY STAR: Draft RFP, pending receipt of ARRA RFP 
template with State of Hawaii, Federal and ARRA reporting requirements. 
(3.1.4.1)
    Gov, Business, NP ES and Code Adoption: Complete draft RFP, 
evaluation committee proposal, evaluation forms and route for final 
review. (3.1.4.2)
    DHHL: Review MOA. (3.1.5)
    DAGS: DAGS Review MOA. (3.1.6)
    SEEARP: Continue to work with Oahu, Maui and Big Island counties on 
prospective projects in support of GREP (3.1.1). Prepare Comprehensive 
Application. (3.1.9)
    CABLE: SDAG Finalize contract terms, begin work on determining 
regulatory and financing issues relative to the development of the 
Interisland Cable. (3.2.1.1)
    CABLE SME: Develop selection committee for the SME contract. 
(3.2.1.2)
    CABLE EIS: Develop selection committee for the EIS RFP. (3.2.1.5)
    Online Permitting: Meet with Department of Health (DOH) to 
determine requirements for RFP and form selection committee. (3.2.2.1)
    Transportation: Update vehicle purchase guidelines. Meet with State 
agency transportation energy lead by example group. (3.3.2)
            Week of August 17
    GREP: Execute MOA with PUC; PUC initiate contract amendment with 
SAIC. (3.1.1)
    CICR: Discuss proposals with SAIC/HEEP. Receive SAIC/HEEP form for 
this program. (3.1.1.1)
    KIUC: Receive draft proposal from KIUC. (3.1.1.3 and 3.1.8)
    --Request to SPO to get an exemption to 103D (Form 7) for a 
            contract to KIUC for GREP programs (depends on receipt of 
            KIUC proposal);
    --Complete draft contract for KIUC and forward draft contract for 
            KIUC review.
    WAP: Receive draft OCS MOA from OCS and revise as appropriate. Send 
to DBEDT ASO/C with AG review. (3.1.2)
    HSWAC: Complete final draft of RFP, appointment of evaluation 
committee with evaluation form; meeting of evaluation committee to 
review RFP and evaluation criteria. (3.1.3)
    Hospitality ENERGY STAR: Establish proposal review committee and 
review the proposal evaluation form with ASO's review and approval. 
Finalize RFP. (3.1.4.1)
    Gov, Business, NP ES and Code Adoption: Complete final draft of 
RFP, appointment of evaluation committee with evaluation form; meeting 
of evaluation committee to review RFP and evaluation criteria. 
(3.1.4.2)
    DHHL: Receive draft MOA from DHHL and revise as appropriate; send 
to DBEDT ASO/C and AG for review. (3.1.5)
    DAGS: Receive draft MOA from DAGS and revise as appropriate; send 
to DBEDT ASO/C and AG for review. (3.1.6)
    CABLE SME: Formalize selection committee for the Interisland Cable 
SME RFP. Meet to discuss requirements and selection criteria. Draft 
contract for the Interisland Cable SME RFP. (3.2.1.2)
    CABLE RFI: Receive approval of sole source justification to use 
HECO for contract from SPO. (3.2.1.3)
    CABLE EIS: Formalize selection committee for the EIS RFP. Meet to 
discuss requirements and selection criteria. (3.2.1.5)
    Online Permitting: Develop requirements for RFP. (3.2.2.1)
    Expedited Permitting Account: Fund the account with ARRA funding up 
to $200,000. (3.2.2.2)
            Week of August 24
    ESH: Begin development of draft SAIC/HEEP MOA on energy solutions 
for the home program to encourage residential customers to reduce 
electricity consumption. (3.1.1.2)
    KIUC: Prepare final contract and send for ASO contract/AG review, 
approval for final. (3.1.1.3 and 3.1.8)
    HSWAC: Send RFP for contract/AG review, approval for issue. (After 
RFP is issued estimate 3 months for advertising, evaluating proposals, 
approvals of contract.) Contract will be issued around end of November. 
(3.1.3)
    Hospitality ENERGY STAR: Issue RFP with ASO's, AG's and SPO's 
review and approval. (3.1.4.1)
    Gov, Business, NP ES and Code Adoption: Send RFP for contract/AG 
review, approval for issue (After RFP is issued estimate 3 months for 
advertising, evaluating proposals, approvals of contract). Contract 
will be issued around end of November. (3.1.4.2)
    DBEDT Block: SAIC reviews MOA. (3.1.7)
    CABLE SME: Send Interisland Cable SME RFP to DBEDT ASO. (3.2.1.2)
    CABLE RFI: Finalize RFI contract with HECO. Send to TEL for 
signature and execution. Send invitations to cable developers RFI 
meeting. (3.2.1.3)
    CABLE RFP: Begin development of cable procurement RFP contract 
requirements for sole source to HECO. (3.2.1.4)
    Online Permitting: Submit RFP for development of online permitting 
contract to ASO. (3.2.2.1)
    Transportation: Meeting with potential partners to discuss vehicle 
technologies, demonstrations, and infrastructure. (3.3.1)
            Week of August 31
    Asia Pacific Clean Energy Symposium + other Training this week
    CICR: Begin development of MOA with SAIC/HEEP on rebate program for 
commercial and industrial customized installation of non-standard 
energy efficiency technologies. (3.1.1.1)
    WAP: Receive OCS MOA from AG. Revise and send to COS/JP/TAP for 
review. (3.1.2)
    Training and Adoption of LEED: Draft RFP. (3.1.4.3)
    DHHL: Receive MOA back from ASO/C and AG; revise and send to COS/
JP/TAP for review. (3.1.5)
    DAGS: Receive MOA back from ASO/C and AG; revise and send to COS/
JP/TAP for review. (3.1.6)
    SEEARP: Continue to work with Oahu, Maui and Big Island counties on 
prospective projects in support of GREP (3.1.1). Prepare Comprehensive 
Application. (3.1.9)
    CABLE SME: Send Interisland Cable SME RFP to SPO for advertisement. 
(3.2.1.2)
    CABLE RFP: Negotiate cable procurement RFP contract requirements 
with HECO. (3.2.1.4)
    CABLE EIS: Develop requirements for EIS RFP. (3.2.1.5)
            Week of September 7
    KIUC: Approval for contract received, send final document to KIUC 
for signature. (3.1.1.3 and 3.1.8)
    WAP: Receive OCS MOA from TAP. Revise and send to OCS for review 
and signature. (3.1.2)
    Training and Adoption of LEED: Establish proposal review committee 
and review the proposal evaluation form with ASO's review and approval. 
Finalize RFP. (3.1.4.3)
    DHHL: Receive MOA back from TAP; revise and send to DHHL for review 
and signature. (3.1.5)
    DAGS: Receive MOA back from TAP; revise and send to DAGS for review 
and signature. (3.1.6)
    DBEDT Block: Receive SAIC MOA back; review recommendations; make 
necessary changes. (3.1.7)
    CABLE SME: Selection committee review results of Interisland Cable 
SME RFP advertisement, select contractor. Begin negations with 
contractor. (3.2.1.2)
    CABLE RFP: Continue negotiation of cable procurement RFP contract 
requirements with HECO. (3.2.1.4)
    CABLE EIS: Develop requirements for EIS RFP. (3.2.1.5)
    Online Permitting: Submit RFP to SPO for advertisement. (3.2.2.1)
    Transportation: Develop outline for implementation plan. (3.3.1)
            Week of September 14
    CICR: Send draft MOA to SAIC/HEEP on rebate program for commercial 
and industrial customized installation of non-standard energy 
efficiency technologies. (3.1.1.1)
    ESH: Send draft MOA to SAIC/HEEP on energy solutions for the home 
program to encourage residential customers to reduce electricity 
consumption. (3.1.1.2)
    DBEDT Block: Send MOA to ASO/C and AG for approval. (3.1.7)
    SEEARP: Continue to work with Oahu, Maui and Big Island counties on 
prospective projects in support of GREP (3.1.1). Prepare Comprehensive 
Application. (3.1.9)
    Renewable Energy: Develop project inventory. (3.2.2.3)
    Transportation: Meet individually with local partners to flesh out 
implementation plan. (3.3.1)
            Week of September 21
    KIUC: Receive KIUC-signed contract back; send for DBEDT Director 
signature. (3.1.1.3 and 3.1.8)
    WAP: Receive signed MOA back from OCS. Send to TEL for signature 
and execution. Begin MOA administration.(3.1.2)
    Hospitality ENERGY STAR: Award Contract with ASO's, AG's and SPO's 
review and approval and have it posted on HePS. (3.1.4.1)
    Training and Adoption of LEED: Issue RFP with ASO's, AG's and SPO's 
review and approval. (3.1.4.3)
    DHHL: Receive signed MOA back from DHHL. Send to TEL for signature 
and execution. Begin MOA administration. (3.1.5)
    DAGS: Receive signed MOA back from DAGS. Send to TEL for signature 
and execution. Begin MOA administration. (3.1.6)
    CABLE SME: Take part in RFI meeting. (3.2.1.2)
    CABLE RFI: Host cable developer conference with HECO. Gather 
information on financing, permitting, procurement, and installation of 
undersea cable from existing cable developers. (3.2.1.3)
    CABLE RFP: Send sole source contract to DBEDT ASO for review. 
(3.2.1.4)
    CABLE EIS: Develop requirements for EIS RFP. (3.2.1.5)
    Online Permitting: Review responses for advertisement of RFP. Begin 
selection of contractor. (3.2.2.1)
    Transportation: Meet individually with local partners to flesh out 
implementation plan. (3.3.1)
            Week of September 28
    CICR: Receive back from SASIC/HEEP draft MOA. Revise and send to 
ASO/C and AG for review and approval. (3.1.1.1)
    KIUC: Receive signed contract back from DBEDT Director; send to 
DAGS for execution and encumbrance. (3.1.1.3 and 3.1.8)
    Hospitality ENERGY STAR: Finalize award if the contract is not 
contested. Issue Notice to Proceed to Contractor. Meet with Contractor 
to review terms and conditions. Begin contract administration. 
(3.1.4.1)
    DBEDT Block: Receive SAIC MOA back from ASO/C and AG. Make changes. 
Send to SAIC for signature. (3.1.7)
    CABLE SME: Review results of RFI meeting with DBEDT, begin 
development or RFP criteria. (3.2.1.2)
    CABLE RFI: Receive HECO's draft report of results from the cable 
developer conference. Report will form the basis for the requirements 
for the RFP for the development of the interisland cable. (3.2.1.3)
    CABLE EIS: Send EIS RFP to DBEDT ASO (3.2.1.5)
    Online Permitting: Begin negotiation with contractor for 
development of online permitting program. (3.2.2.1)
    Transportation: Meet individually with major State fleets; develop 
plan for demonstrations and infrastructure. (3.3.2)
            Week of October 5
    ESH: Receive draft MOA back from SAIC/HEEP. Make revisions; send to 
ASO/C and AG for review and approval. (3.1.1.2)
    KIUC: Receive executed contract back from DAGS; send to KIUC with 
notice to proceed. (3.1.1.3 and 3.1.8)
    Hospitality ENERGY STAR: Negotiate contract with awardee. (3.1.4.1)
    SEEARP: Finalize projects with Oahu, Maui and Big Island counties 
in support of GREP (3.1.1). Finalize Comprehensive Application. (3.1.9)
    CABLE RFP: Send sole source contract to SPO for advertisement and 
approval. (3.2.1.4)
    Online Permitting: Finalize contract, send to TEL for signature. 
Obligate funds. (3.2.2.1)
    Transportation: Finalize draft implementation plan. Forward for 
Director's review. (3.3.1/3.3.2)
            Week of October 12
    CICR: Receive back from ASO/C and AG draft SAIC/HEEP MOA. Revise 
and send to TAP and Director for approval. (3.1.1.1)
    KIUC: Meet with KIUC to review scope of contract; begin contract 
administration. (3.1.1.3 and 3.1.8)
    Training and Adoption of LEED: Award Contract with ASO's, AG's and 
SPO's review and approval and have it posted on HEPS. (3.1.4.3)
    DBEDT Block: Receive signed SAIC MOA back; send to TAP and TEL for 
final review and signature. (3.1.7)
    SEEARP: Submit Comprehensive Application on FedConnect.net. Await 
notification of financial assistance award by December 2009. (3.1.9)
    CABLE EIS: Send EIS RFP to SPO for advertisement. (3.2.1.5)
    Online Permitting: Gather all possible permits for renewable energy 
projects. (3.2.2.1)
    Transportation: Follow up with vehicle manufacturers; schedule 
calls. (3.3.1/3.3.2)
            Week of October 19, 2009
    CICR: Receive back from Director's Office approved draft MOA with 
SAIC/HEEP. Revise as needed and send to TAP and Director for review and 
approval. (3.1.1.1)
    ESH: Receive draft MOA back from ASO/C and AG. Make revisions; send 
to SAIC/HEEP for review and signature. (3.1.1.2)
    Hospitality ENERGY STAR: Send draft contract to ASO/C and AG for 
review and approval (3.1.4.1)
    Training and Adoption of LEED: Finalize award if the contract is 
not contested, and Issue Notice to Proceed to Contractor. (3.1.4.3)
    DBEDT Block: Execute SAIC MOA; send copy to SAIC. Begin MOA 
administration. (3.1.7)
    Online Permitting: Organize permitting requirements by technology 
and location. Develop online wizard for required permits to determine 
permitting requirements for individual projects. (3.2.2.1)
    Transportation: Develop guidelines for infrastructure and grant 
program. (3.3.1)
            Week of October 26, 2009
    ESH: Receive draft MOA back from TAP and Director. Make revisions; 
send to SAIC/HEEP for review and signature. (3.1.1.2)
    Training and Adoption of LEED: Execute Contract. (3.1.4.3)
    CABLE RFP: SPO approves HECO sole source justification for 
development of inter-island cable requirements. Final contract sent to 
TEL for signature. (3.2.1.4)
    Online Permitting: Develop online wizard for required permits to 
determine permitting requirements for individual projects. Organize 
permits to allow for online entry of data into subject areas. (3.2.2.1)
    Transportation: Develop ``critical mass'' plan, with commitments 
for 300-500 vehicles in 2010-2011. (3.3.1/3.3.2)
            Week of November 2, 2009
    CICR: Receive back from SAIC/HEEP signed MOA. Send to Director for 
signature. (3.1.1.1)
    Hospitality ENERGY STAR: Receive contract back from ASO/C and AG. 
Make corrections and send to TAP and Director for review and approval. 
(3.1.4.1)
    Gov, Business, NP ES and Code Adoption: Contract complete, issue to 
Contractor, meeting with Contractor to go over scope, begin contract 
administration. (3.1.4.2)
    CABLE RFP: HECO begins development of requirements and evaluation 
criteria for the inter-island cable procurement RFP. (3.2.1.4)
    CABLE EIS: Selection committee review responses to EIS RFP. Begin 
selection process for contractor to perform EIS. (3.2.1.5)
    Online Permitting: Develop server requirements and tracking system 
for permits. (3.2.2.1)
    Renewable Energy: Draft RFP. (3.2.2.3)
    Transportation: Provide information on vehicle plan to 
manufacturers. (3.3.1/3.3.2)
            Week of November 9, 2009
    CICR: Receive back from Director signed SAIC/HEEP MOA. Send copy to 
SAIC/HEEP. Begin MOA administration. (3.1.1.1)
    ESH: Receive signed MOA back from SAIC/HEEP. Send to TAP and 
Director for signature. Begin MOA administration. (3.1.1.2)
    Hospitality ENERGY STAR: Receive contract back from TAP and 
Director. Make corrections and send to Contractor for review and 
signature. (3.1.4.1)
    CABLE SME: Work with HECO for development of RFP criteria for the 
procurement of the interisland cable. (3.2.1.2)
    CABLE EIS: Finalize selection of Contract for EIS, begin 
negotiations with contractor. (3.2.1.5)
    Transportation: Provide information on vehicle plan to 
manufacturers. (3.3.1/3.3.2)
            Week of November 16, 2009
    Hospitality ENERGY STAR: Receive contract back from Contractor. 
Send to Director for signature. Send to DAGS for execution and 
encumbrance. (3.1.4.1)
    CABLE EIS: Ongoing negotiations with contractor. (3.2.1.5)
    Online Permitting: Begin trials of online permitting system. 
(3.2.2.1)
    Transportation: Schedule meetings between fleets and vehicle and 
infrastructure providers. (3.3.1/3.3.2)
            Week of 23 November 2009
    HSWAC: Contract complete, issued to Contractor, meeting with 
Contractor to focus on scope. (1.3)
    Hospitality ENERGY STAR: Receive executed contract back from DAGS. 
Send Contractor Notice to Proceed. Meet with Contractor to review 
requirements. Begin contract administration. (3.1.4.1)
    CABLE EIS: Finalize EIS contract, send to TEL for signature. if the 
contract is not contested, issue Notice to Proceed to Contractor. 
(3.2.1.5)
    Online Permitting: Continue trials of online permitting system. 
(3.2.2.1)
    Transportation: Continue meetings between fleets and vehicle and 
infrastructure providers. (3.3.1/3.3.2)

    Chairman Inouye. Thank you very much, Mr. Liu.
    How much will this cable cost?
    Mr. Liu. As Mr. Parks said, we are doing the detailed 
business and financial cost benefit analysis of the cable, now. 
You've asked specifically about the cable, so the cable itself, 
we believe is probably going to come out in the range of $800 
million to $1 billion, depending on various configurations. 
Now, that is based on preliminary conversations that we've had 
with developers that have done this before, but a lot of it 
depends on the technical assessment that is now being 
undertaken with the support of the DOE, that is really 
finalizing the engineering and technological parameters against 
which the potential bidders will finally bid, and give us a 
final price.
    But the cable itself is only part of the equation. We have 
the wind farms, which the developers need to invest in and 
build, and we also have significant terrestrial upgrades, like 
utility HICO, MICO and others will have to make. Which, 
Senator, presents us with a rare opportunity to modernize what 
is acknowledged to be an antiquated terrestrial grid, and that 
could be several hundred million dollars more.
    This is nothing short but an investment in a 21st century 
modern inter-island, statewide grid system, which has a lot of 
benefits.
    Chairman Inouye. Under the present arrangement, the State 
of Hawaii will be the owner of the cable, is that right?
    Mr. Liu. That is still being discussed. Our ultimate 
objective is the most efficient and effective means to get this 
cable developed and built and commissioned, consistent with 
Hawaii's environmental policy and public needs.
    So, balancing all of those factors, if obtaining that goal 
requires State ownership, that's the route we will take, but 
regardless, the State will play a major role, at least 
overseeing and being a significant partner in this endeavor.
    So, the answer is, we're looking at all options, all aimed 
at making sure we get this thing done.
    Chairman Inouye. What we're discussing is primarily the 
development of electricity, so there's very limited on the 
automobile side.
    Until recently, Hawaii--statistically, on a per capita 
basis, had more limousines, more luxury cars----
    Mr. Liu. More Hummers.
    Chairman Inouye [continuing]. And more Humvees and other 
huge gas guzzlers. Do you believe that the people of Hawaii are 
sufficiently knowledgeable and cautious and concerned about 
energy problems?
    Mr. Liu. Senator, you've hit upon a major component of what 
HCI needs to accomplish. Besides regulatory, policy, business 
model, you know, we form a big component of HCI, and a model 
that can be for the Nation is how we educate and change human 
behavior--both in how we use our electricity and our ground 
transportation choices.
    I would say that at this point, I can't say that I am 
confident that Hawaii residents are prepared to give up their 
pickups, huge pickups, F-150s, for electric-powered vehicles. 
But I believe that if we do our job properly that we will 
create that energy consciousness, and finally, sir, nothing 
will work better than $6, $7 a gallon gasoline.
    Chairman Inouye. Well, there are a lot of statistics that 
concern me, for example, there are more automobiles per capita 
in the city of Honolulu than the city of Los Angeles, and well, 
we can't keep it up that way.
    Mr. Liu. Agreed, agreed.
    Chairman Inouye. I hope that you'll succeed in the 
educational portion of this act.
    Mr. Liu. Well, Senator, with your support, because you've 
been such an advocate of us being on clean and renewable 
energy, with your support, and the work of all of the other 
stakeholders, we have to succeed.
    Chairman Inouye. Well, I thank you very much.
    And the final witness is the technical director of the 
Hawaii Renewable Energy Development Venture of the Pacific 
International Center for High Technology Research, Mr. Maurice 
Kaya.
STATEMENT OF MAURICE H. KAYA, TECHNICAL DIRECTOR, 
            PACIFIC INTERNATIONAL CENTER FOR HIGH 
            TECHNOLOGY RESEARCH
    Mr. Kaya. Thank you very much, Chairman.
    Chairman Inouye. That's a big title.
    Mr. Kaya. It certainly is, and the first thing I'll do is 
I'm going to use PICHTR for the first, and HREDV for the 
latter.
    As you mentioned, I am the technical director, and I think 
my perspective will be very different than those that have 
appeared before you, to date, simply because PICHTR and HREDV 
is not intended to be the recipient of any of these ARRA funds. 
Our primary role is to try to mobilize, with respect to energy, 
the opportunities that are inherent within ARRA for the private 
sector, and that's essentially what our mission is.
    Needless to say, through your support, this program has 
been set up in such a way to try to achieve the goals that the 
State and the Department of Energy have laid out with respect 
to the Hawaii clean energy initiative, and in recognizing that 
the Government can do a very capable job of enabling the 
transformation that you all desire to take place, but 
ultimately it will rest upon the private sector and us as 
individual consumers to help this transformation come along.
    So, in that spirit, what we have been doing to spend the 
ARRA funds has been focused primarily on the competitive 
aspects of ARRA as it relates to the energy program.
    Through HREDV, we've benefited because we've gained a 
fairly significant understanding of the needs of the private 
sector here in Hawaii, as it relates to clean energy 
technologies, and as a result of this understanding, we have 
tried to better position some of the folks that have been very 
interested and there have been many that have been very 
interested in some of the competitive opportunities that D.C. 
envisioned coming from the deployment of these considerable 
dollars from the Federal Government.
    Needless to say, we are extremely grateful to you, Mr. 
Chairman, and the Appropriations Committee for all of the 
support that you've provided to Hawaii, to date. We've never 
had so much attention on energy from the U.S. Government since, 
possibly, the energy crisis of the 1970s, and I think part of 
that is very welcome.
    ARRA has opened substantial additional opportunities for 
Hawaii clean tech companies to compete for this funding in a 
variety of areas through these competitive solicitations.
    Since February 2009 when ARRA was enacted, we've noted with 
some concern that the progress by the Federal Government on the 
actual solicitations for funding has been slower than we might 
have expected, and you've heard others testify as to the 
reasons for that.
    In some cases, however, these solicitations specifically 
were written in a way that might have disadvantaged Hawaii's 
companies--we're predominantly small and medium-sized 
enterprises, and it's in this area that I'd like to offer some 
comments.
    In order to improve ARRA and in future similar programs, 
your committee may wish to consider several things. First of 
all, with respect to the overall program management that 
generally comes out of the U.S. Department of Energy, we feel 
that some effort can be very welcome to get the program 
managers to improve the dissemination of information regarding 
some of these funding opportunities for such a large and 
complex program. Because Hawaii's renewable energy companies, 
energy efficiency companies tend to be SMEs, or small and 
medium-sized enterprises, you might wish to, in the future, see 
if it might be possible to dedicate a portion of these types of 
funds specifically targeted to assist small and medium-sized 
enterprises, as is commonplace in other Federal programs, as 
well.
    I think that finding ways to direct Federal program 
managers to help facilitate deployment in regions, States and 
localities is also a very critical enabler. Hawaii is no 
better--there's no better example than Hawaii, in terms of what 
I mean by this. The very fact that we have a senior executive 
from the Department of Energy helping us access the 
bureaucracies in Washington, DC has been a very significant 
impetus and enabler for those of us in Hawaii to become much 
more competitive.
    Supporting adequate investments in training and workforce 
development for the green jobs of the future that we're 
anticipating is also, we feel, a key component that needs to be 
addressed. There's some pieces or elements that are 
specifically targeted to this, but I do think that even in the 
deployment of some of these funds, if they were specifically 
done in such a way that workforce development and engaging with 
the larger community in being able to produce the kind of 
talent that we need for the long term as we make this 
transformation, is an important piece of what could be 
achieved.
    And finally, an impediment for some of our smaller 
companies has been the requirement that is imposed on these 
companies in the competitive framework to come up with a 
certain amount of cost share. When you're putting up large 
amounts of money, as ARRA has done, and when you have small 
companies, your ability to raise the kind of cost share that is 
being required as part of the solicitations has been a 
significant impediment for some of these companies.
    Now, we all know that Hawaii has tremendous potential to 
lead the Nation in transforming its legacy fossil fuel systems 
to renewable energy, I think everybody agrees with that.
    But at the same time, Hawaii--because of its unique 
situation, has to continue to rely on external sources of 
investment as we make this transition, including assistance 
from the Federal Government.
    ARRA and programs like it can be significant enablers, and 
while the opportunity ARRA has created for private sector here 
in Hawaii is both needed and welcome, I think our experience 
has shown, to date, based on a common set of suggested data 
that it can be improved in certain ways.
    So, thank you very much for the opportunity to offer these 
comments. Again, I'm speaking generally on behalf of some of 
the private sector interests that have been very involved in 
trying to take advantage of ARRA.
    Thank you, again, Mr. Chairman.
    [The statement follows:]

                   Prepared Statement of Maurice Kaya

    Senator Inouye and members of the U.S. Senate Committee on 
Appropriations, my name is Maurice Kaya. I am the Technical Director 
for the Pacific International Center for High Technology Research 
(PICHTR), a Hawaii-based international not-for-profit company whose 
mission is to deploy appropriate technologies, including renewable 
energy, for the benefit of Hawaii and other Pacific Island nations. 
Prior to my association with PICHTR I had the honor and privilege of 
serving as the energy director and chief technology officer for the 
Hawaii Department of Business, Economic Development and Tourism.
    In my comments before you and the committee, I will focus mainly on 
the importance of the American Recovery and Reinvestment Act (ARRA) 
from the perspective of the private sector in Hawaii as it relates to 
Hawaii achieving its long-term energy security objectives. I have spent 
over two decades helping Hawaii address critical energy security issues 
resulting from its overdependence on imported oil. In the past 3 years 
we have seen unprecedented interest and attention at the policy-level 
to increase the efficiency of our energy systems and usage, stimulate 
the development of renewable energy resources, facilitate the 
development of locally grown bio-based substitutes for petroleum fuels, 
and encourage investments in advanced energy technologies by Hawaii 
companies to solve Hawaii problems.
    In 2006 Hawaii's policymakers adopted an integrated set of 
legislative actions that established a much needed framework for 
transformation of Hawaii's energy markets away from imported fossil 
fuels. This action received national attention. The opportunity created 
by Hawaii's policy initiative led to an unprecedented partnership 
between the Hawaii State government and the U.S. Department of Energy 
in January 2008 that we now know as the Hawaii Clean Energy Initiative 
(HCEI). HCEI seeks to help Hawaii satisfy its energy needs using 70 
percent clean energy by 2030. Through analytical work that HCEI has 
sponsored we now know that these levels are indeed possible with 
continued advancement and deployment of clean energy technology, a 
supportive policy and regulatory environment, new business models for 
some of our incumbent energy companies, sufficient access to capital, 
and developing synergistic approaches for development and use of 
Hawaii's remarkable renewable energy assets holistically across the 
State.
    Policy development and analysis are important enablers, but we must 
continue to remind ourselves that the profound transformation of our 
energy systems to one dependent primarily on clean energy efficiency 
and renewable energy technologies cannot be achieved without 
investments made by the private sector and individual consumers. We are 
extremely grateful to you, Mr. Chairman, and the Appropriations 
Committee for all of the support you have provided to Hawaii to date. 
We have never had so much attention on energy from the U.S. Government 
since possibly the energy crises of the 1970s. The new administration 
in the White House has raised the hopes of all of us who have toiled to 
address these types of energy issues for so long. With the enactment of 
ARRA significant dollars are being directed to Hawaii through formula 
and block grant funding. Additionally ARRA has opened substantial 
opportunities for Hawaii companies to compete for funding in a variety 
of areas through competitive solicitations administered primarily 
through the Department of Energy. The interest level for these funds 
from Hawaii companies has been very high from the inception of the 
program and continues today.
    PICHTR is the administrator of a program that you have supported, 
the Hawaii Renewable Energy Development Venture (HREDV). This is a 
program that also has as its core objective, helping to grow the clean 
technology sector in Hawaii to fulfill the needs identified by the 
overarching framework of the Hawaii Clean Energy Initiative and State 
and national policy directives. Thus our focus is on identifying, 
nurturing and supporting the growth to maturity of Hawaii-based 
enterprises in the clean tech industry. Our attention at PICHTR is 
directed at providing funding support to Hawaii-based companies, but 
equally importantly, providing these companies with the insights, 
tools, and skills that they need to improve their ability to compete 
for investment dollars, whether from public or private sources, and to 
sustain their enterprise in today's increasingly demanding and 
competitive markets.
    Through HREDV we have gained a significant understanding of the 
clean tech sector in Hawaii. We have established a large network of 
interested companies and organizations, and have used these contacts to 
better appreciate the needs of the private sector as these companies 
try to deploy green technologies. In many cases, companies with access 
to emerging technologies believe that Hawaii is the perfect location 
for early adoption, and seek information that will help them access the 
market better. In other cases, developers and entrepreneurs are looking 
to form strategic partnerships with landowners, investors, or other 
energy companies. In practically every instance, we note a consistent 
desire to better manage project risk by reducing uncertainties related 
to obtaining government permits, more predictable contract terms from 
wholesale purchasers of energy like the electric utilities, and 
reducing project financial risk through public private partnerships 
especially those that qualify for co-funding through sources such as 
ARRA and other public funding.
    When ARRA was first enacted we immediately foresaw its potential to 
benefit Hawaii companies who were trying to advance their innovations 
into our markets. We all recognize that Hawaii has long been challenged 
by the absence of investment capital to support local entrepreneurs. 
With the significant amount of funding directed to clean energy 
investments, ARRA was poised in a very timely way to help the State 
move quickly to deploy energy projects to fulfill the vision of the 
Hawaii Clean Energy Initiative. Working with your staff and others in 
State government, we organized an Industry Briefing on ARRA in April 
2009 which was designed to inform Hawaii energy companies on the 
opportunities available and encourage the formation of strategic 
partnerships by having companies representing a variety of clean energy 
sectors speak to their capabilities in order to encourage dialogue and 
identify complementary strengths.
    Since February 2009, when ARRA was enacted, we have noted with some 
concern that progress by the Federal Government on the actual 
solicitations for funding has been slower than expected, and in some 
cases, the solicitations were written in a way that disadvantaged 
Hawaii companies. For example significant funds were provided to 
advance smart grid technology in the United States. There is 
significant interest in Hawaii in smart grid technology as an enabling 
technology to help increase energy efficiency and renewable energy 
levels desired under HCEI. After a public comment period, the 
Department of Energy opted to issue its smart grid solicitations with a 
preference favoring large proposals funded in the hundreds of million-
dollar scale. For Hawaii, with its smaller sized electric utilities and 
the preponderance of small and medium sized enterprises (SMEs), the 
size of the projects envisioned make it difficult to raise the required 
cost share in response to the solicitations without large corporate 
partners from the mainland. From this experience we can conclude that 
it may be advisable to investigate whether there can be some carve outs 
or set asides for small businesses much like other Federal programs on 
the basis that innovative technology development is not limited to 
large business.
    Similarly there are other challenges that have been faced by Hawaii 
clean tech SMEs who are interested in ARRA funding. You may wish to 
consider the following factors in evaluating the effectiveness of, and 
possibly improving this funding program, or for future programs:
  --Improve the dissemination of information regarding upcoming funding 
        opportunities. Because of the breadth of ARRA, and because of 
        the Federal Government's reliance on a single procurement 
        announcement site (grants.gov) it is difficult for all but the 
        most knowledgeable and dedicated businesses to glean 
        information of specific interest from the existing procurement 
        site. Many interested proposers have become aware of 
        opportunities through word-of-mouth.
  --Seriously consider dedicating a portion of stimulus funding to 
        small or disadvantaged small businesses in an effort to ensure 
        that the Nation's backbone of job creation, small businesses, 
        get a meaningful opportunity to compete for funding.
  --Look for ways for Federal program managers to get more involved 
        with facilitating deployment in regions, States, and 
        localities. Without investment in partnership building through 
        HCEI and the visible presence of numerous Department of Energy 
        and national laboratory personnel in Hawaii, we would be 
        severely disadvantaged by our remoteness and unfamiliarity with 
        program direction in Washington where decisions are made. 
        Fortunately for Hawaii we have benefited by the presence of Mr. 
        Bill Parks of DOE, who has been on assignment in Hawaii for 
        almost 3 years, and his presence has helped us understand how 
        to access Federal resources immeasurably.
  --To build the capacity we need in the technology sector to solve the 
        energy challenges faced by Hawaii and the Nation, ensure that 
        sufficient resources are allocated to training and developing 
        the future workforce for the green tech field.
  --Review the requirement for cost share. Raising sufficient cost 
        share may put worthy projects out of reach for many companies 
        developing innovative technologies.
    Accordingly those of us, including HREDV, who have been trying to 
position our local companies to be more competitive with ARRA funding 
have tried to gain insight on potential solicitations through our 
contacts with knowledgeable Federal sources. We have also tried our 
best to facilitate the formation of strategic partnerships by 
suggesting interested businesses to form competitive teams, offering 
counsel and advice regarding proposal preparation and doing business 
with the Federal Government, and serving as a bridge to link resources 
and expertise that might be available from the University of Hawaii 
with its notable track record in attracting Federal grants. Any 
assistance that you can provide to support these types of capacity 
building efforts would be very helpful.
    In closing, Hawaii has the potential to lead the Nation in reducing 
dependence on imported petroleum and transforming its energy systems to 
one dominated by more secure energy efficiency and renewable energy. We 
have the best natural resource asset base, we have great motivation 
because of our high energy prices, our desire to maintain our beautiful 
environment, and we have significant security concerns to protect our 
fragile economy and the Nation's investment in major defense 
installations within the State. We have the supportive policy 
environment and we are working diligently to reform energy markets to 
favor clean energy systems. But we will continue to have to rely on 
external sources of investment as we make this transition, including 
assistance from the Federal Government. ARRA and programs like it can 
be a significant enabler, and while the opportunity ARRA has created 
for the private sector here in Hawaii is needed and welcome, our 
experience has shown that it can be improved.
    Thank you for your consideration and attention. And thank you again 
for your continued support of Hawaii's efforts to lead the Nation in 
addressing energy vulnerabilities through reliance on energy efficiency 
and renewable energy.

    Chairman Inouye. You were invited for this specific 
purpose, to tell us what the thoughts are from the private 
sector, and I hope you'll permit my staff to communicate with 
you on drafting something that I'd like to share with my 
colleagues.
    And I want to thank all of you for your testimony. It's 
been extremely helpful.
    About 1 week ago, I was asked by several people as to my 
concern on convening this hearing. A couple of reporters came 
up to me, and said, ``Aren't you concerned about having a 
hearing, and having people screaming and yelling?'' And I said, 
``That was not my concern,'' because I've been in this business 
for a little while, and the people of Hawaii have always been 
courteous, concerned about the other party, and I just couldn't 
see a hearing of this nature ending up in a shouting match.

                    ADDITIONAL SUBMITTED STATEMENTS

    So, I want to thank the audience for making me look good, 
and I think my colleagues in the Senate will be extremely 
envious when I tell them that we had a hearing, and no one 
screamed, no one said, ``No.''
    [The statements follow:]
Prepared Statement of Neil Abercrombie, U.S. Representative From Hawaii
    Chairman Inouye and the Senate Appropriations Committee, I commend 
you for convening this hearing to look into the State of Hawaii's use 
of funds from the American Recovery and Reinvestment Act (ARRA). As you 
are well aware, these funds are intended to launch an economic recovery 
by creating or saving millions of jobs while addressing long neglected 
challenges. How Hawaii uses its funds will impact this State for many 
years to come and will determine how far ahead Hawaii will advance its 
goals of energy independence, quality education, and sound 
infrastructure.
    With this purpose in mind, I would like to state three concerns 
with regard to funding from the economic recovery bill in Hawaii.
    First, I am concerned that the State's handling of the educational 
components of the ARRA puts in jeopardy Hawaii's chances at future 
funding. Earlier this year, the Governor outlined plans to severely cut 
the funds of the Hawaii Department of Education (HIDOE) and to instead 
use State Fiscal Stabilization Fund money to maintain the level of 
education funding, which would make the program's goal to support 
dramatic education reform very difficult to achieve. The State's 
application to the U.S. Department of Education (ED) was very vague in 
its description of how the State would use the funding to achieve 
ARRA's four areas of education reform:
  --Adopting internationally benchmarked standards and assessments that 
        prepare students for success in college and the workplace;
  --Recruiting, developing, and retaining effective teachers and 
        principals;
  --Building data systems that measure student success and inform 
        teachers and principals how they can improve their practices; 
        and
  --Turning around our lowest-performing schools.
    This is a problem because ED's Race to the Top Program, of which 
there is $4.35 billion in discretionary grants available to States, 
requires States to show reform to be in contention. ED states that the 
Race to the Top Program,

``provides competitive grants to encourage and reward States that are 
creating the conditions for education innovation and reform; 
implementing ambitious plans in the four education reform areas 
described in the ARRA; and achieving significant improvement in student 
outcomes, including making substantial gains in student achievement, 
closing achievement gaps, improving high school graduation rates, and 
ensuring that students are prepared for success in college and 
careers.''

    By using ARRA funds to simply maintain funding, it appears 
extremely unlikely that the State of Hawaii will be eligible for the 
Race to the Top Program. I am concerned the State is giving away an 
opportunity for more Federal funding and significant educational 
improvements in order for an easy solution to part of its budget 
shortfall.
    Secondly, in an August 6, 2009 letter to Governor Lingle, Chairman 
of the House Transportation Committee, James Oberstar, wrote that over 
the past 5 months:

``almost all States have moved forward aggressively to use the highway 
funds provided under the Recovery Act to create and sustain family-wage 
jobs, contribute to our Nation's long-term economic growth, and help 
the United States recover from the worst recession since the Great 
Depression. Regrettably, Hawaii is not among these States. Based on 
progress reports submitted to the Committee in July 2009, Hawaii is 
falling far behind other States in putting to work its Recovery Act 
highway formula funds. According to submissions received from all 
States and the District of Columbia, your State ranks 50 out of 51, 
based on an analysis of the percentage of Recovery Act highway formula 
funds put to bid, under contract, and underway. As of June 30, Hawaii 
had begun construction of projects totaling zero percent of the State's 
funding.''

    In his response to Chairman Oberstar's letter, Hawaii Director of 
Transportation Brennon Morioka wrote in an August 20, 2009 letter that 
of the 19 (10 State and 9 local) ARRA projects, ``9 of the 10 projects 
have been awarded, 5 have been issued notice-to-proceed.'' Mr. Morioka 
further reports that ``Federal funds for two out of the nine county 
projects have already been obligated'' and the goal is to ``have 
allocations being drawn for all projects by the end of October.''
    However, other States haven taken immediate action to revitalize 
their local economy, the risk of losing millions of dollars in Federal 
funding for Hawaii remains. So I urge Governor Lingle to aggressively 
take action to use highway funds provided by the ARRA. We cannot be 
content with the current projects in the pipelines and the speed at 
which our State is moving to put people in Hawaii back to work.
    My third and final comment is with regard to the alternative energy 
funding that is being disbursed through the Department of Energy and 
the Department of Agriculture. Multiple energy companies in Hawaii have 
brought it to my attention that projects are being awarded to companies 
who have previously submitted proposals to these departments, thereby 
blocking new proposals from consideration. I understand this vastly 
increases the speed at which funds may be dispersed and put to use in 
the economy. However, it has also come to my attention that awards are 
being made to big businesses and the oil and gas industry who are also 
becoming involved in alternative energy projects. When combined, these 
actions have the result of limiting the involvement of small businesses 
who have a long history in this field or who may have innovative 
technology that has not yet caught the attention of bigger businesses. 
I am also concerned that we may be trusting industry companies to move 
forward when they have a vested interest in the status quo. A wider 
disbursement of funds would help ensure efforts do not become 
concentrated in specific companies. This funding will also help our 
State to continue making new inroads into alternative energy research 
and development and to generate additional momentum to our quest to 
become more energy independent. ARRA funding is certainly not the 
panacea for alternative energy development, but it does provide an 
opportunity to take another significant step in the right direction.
    Again, mahalo for holding this hearing and taking the time to 
ensure Hawaii's share of funding is spent as efficiently and 
effectively as possible.
                                 ______
                                 
   Prepared Statement of the Hawai`i Charter Schools Network of the 
          Unified Voice of Hawai`i's 31 Public Charter Schools

    Aloha Senator Inouye and Honorable Members of the Committee: Thank 
you for this extraordinary opportunity to provide testimony directly to 
your esteemed Senate Committee on Appropriations. Distance can be a 
hurdle in itself, and as you well know, the view from the field is 
often quite different than what is seen by post command. Therefore, the 
chance to address you with candor and immediacy is welcome indeed.
    Hawai`i's public charter schools are facing unparalleled reductions 
in statutory per pupil allocations, and ARRA funding was used to 
supplant State funding cuts, rather than fund projects, create jobs, or 
bolster support services--which appears to be a funding practice 
objected to by the Hawai`i Legislature vis-a-vis a similar plan from 
Governor Lingle where the Hawai`i DOE was concerned, yet applied, ipso 
facto to the public charter schools.
    Furthermore, the Charter School Administrative Office has informed 
the schools that it has not been able to draw down these funds, even 
though the Legislature appropriated them on May 4th, Act 162 was signed 
on June 29th, and the school year is already well underway.
    The U.S. Census recently released data on State-by-State per pupil 
spending. Hawai`i expended $11,060 per pupil in 2007 for 180,000 public 
school students, including children attending public charter schools. 
That year, Hawai`i's charter school children were funded at $8,149 per 
pupil.
    However, the conspicuous problem is not with that 2007 snapshot 
data, per se; the real problem is that in the current 2009-10 school 
year, State funding for charter school children is at only $5,500 per 
capita, a 33 percent drop. Notably, a proportional reduction to the 
overall public education budget does not exist, even in the current 
crisis. Only charter school children are impacted by such a cutback.
    State funding for children attending Hawai`i public charter schools 
is now half that of traditional DOE schools. In addition, only funding 
for public charter school kids is being supplanted with ARRA funds (see 
appended Conference Committee Report #167).
    An apparently purposeful and systemic reduction in per-pupil 
funding based solely on the type of public school a child attends is 
antithetical to the foundations of our society. As long as the Hawai`i 
legislature continues to honor a caste hierarchy of public education 
funding, discriminatory resource allocation will continue.
    Charter schools are public schools. A public school student is a 
public school student. There is no tenable stance to justify 
discrimination based on one public school type versus another.
    Despite the foundational goals toward equal funding underpinning 
Hawai`i's single education system, the policy timbre of the Hawai`i 
legislature has resurrected Jim Crow.
    This reference is not simply rhetorical posturing when you consider 
that over half of the public charter schools are engaged in Hawaiian 
Language Immersion and cultural reinvigoration, and that 26 of 31 
public charters reside in underserved rural communities like Puna, 
Molokai, Kauai and the Leeward Coast.
    It is even harder to ignore this situation in light of President 
Obama and Secretary Duncan's vocal admonitions of States to increase 
the number of charters, while holding them up as models of 
accountability. The net result at this point is not only that Hawai`i 
may be ineligible for Race to the Top and other Federal programs 
focused on improving how States treat their public charter schools, but 
also that it exacerbates an already extant Federal funding disparity 
between DOE and public charter schools disproportional to the total 
public school population.
    A public school student is a public school student. The creation of 
a second class of substandard funding of some public school students 
versus others has ironically been worsened by the influx of ARRA 
funding, and how the Hawai`i Legislature has chosen to implements those 
funds.
    Thank you for your thoughtful consideration. If you need further 
information, please contact myself, or Mr. Alapaki Nahale-A, executive 
director of the Hawai`i Charter Schools Network.

                                Appendix

    From Legislative Conference Committee Report #167, 2009 Legislative 
Session, regarding funding reductions to public charter school 
students:
    Your Committee on Conference respectfully disagrees with the 
Governor's initial plan regarding the timing of the use of a large 
portion of Federal stimulus funds intended for education stabilization. 
In the interest of protecting the school system from much of the impact 
of the budget shortfall, your Committee on Conference has provided 
$56.6 million in stimulus dollars for education each year of the 
biennium. These funds will be distributed between public schools and 
charter schools, based on the latest enrollment projection available to 
your Committee on Conference. By contrast, the Governor proposed to 
immediately use $90 million of the $113 million in the Federal stimulus 
funds intended to go to lower education in an effort to balance the 
State budget in the current fiscal year.
    The receipt of Federal stimulus funds has provided your Committee 
on Conference with an opportunity to make adjustments to the charter 
schools' fiscal year 2010 and fiscal year 2011 budget allocations to 
accurately reflect the amounts prescribed by section 302B-12, Hawaii 
Revised Statutes. Charter schools will be able to make the $5.3 million 
corrective reduction of general funds without substantial impact to 
delivery of services because the charter schools' budget will be 
largely offset by the addition of funds for collective bargaining and 
$2.8 million in Federal stabilization funds. The net reduction to the 
charter school budget will be less than $1 million, which represents a 
year-to-year reduction of less than 2 percent.
    Your Committee on Conference has struggled this session to make 
informed and equitable decisions regarding charter school funding 
because of the limited information charter schools made available. 
Charter schools currently enjoy an extremely flexible operating 
environment, which was provided to enhance program creativity and 
resourcefulness with the goal of creating better outcomes for students. 
However, as a publicly-funded entity, charter schools must provide 
transparency and ensure that public funds are properly used. Your 
Committee on Conference requests that charter schools provide a budget 
that reflects all fiscal resources anticipated to be available to the 
charter schools for the next year; report on the consistency of 
procurement practices with the guidelines in Chapter 302B, Hawaii 
Revised Statutes; and account for all exemptions to normal employee 
compensation levels. Your Committee on Conference also requests that 
all charter schools work with the Charter Schools Administrative Office 
annually to provide the Legislature full and accurate financial 
information to enhance future decision making processes.
                                 ______
                                 
      Prepared Statement of Waldeen K. Palmeira, Hui Na Makaiwa o 
                            Wailuanuiaho`ano

    Aloha Mr. Chairman: I appreciate the opportunity to submit this 
statement to the Senate Appropriations Committee. I write with a sense 
of urgency and in behalf of Native Hawaiians on Kauai regarding the 
route of a bike path proposed to traverse Wailua Beach. The project is 
being funded by money made available by the Stimulus Program approved 
by Congress earlier this year. This is in regards to the Lydgate-to-
Kapa`a Bike and Pedestrian Path.
    I carry with me the support of the Executive Committee of the Kauai 
Chapter of the Sierra Club, which joins me in this statement.
    First, I want to assure you and the Committee that our community 
does not oppose the entire bike path program. Our concern is focused on 
the specific route that has been chosen for Wailua by the advocates of 
the path, which if implemented, would desecrate an area of great 
spiritual and historic importance to Kaua`i and all of Hawai`i.
    Wailua Beach on the east side of Kauai is known to have been a very 
important early point of contact by the first Polynesians to reach the 
shores of what became Hawai`i. The traditional name Wailuanuiaho`ano, 
meaning ``great and sacred Wailua'' exemplifies the sacred nature of 
the entire region, which starts on the sands of Wailua beach. The 
Native Hawaiian community reveres this beach, which has well known 
heiau at each end. There is high probability that many Iwi Kupuna and 
cultural remains are near the area of affect of Wailua beach. This may 
be connected to the well known traditional burial grounds named 
Mahunapu`uone.
    At the south end of the beach, the Wailua River empties into the 
Pacific Ocean with waters that originate at Wai`ale`ale, the sacred 
mountain at the center of Kauai revered throughout Hawai`i. The 
Hikinaakala Heiau on the south end of Wailua beach is one of many 
important Native Hawaiian cultural and religious sites of this coastal 
area and one of five National Historic Landmark sites in Wailua. On the 
North end of Wailua beach is Kukui heiau, a navigational heiau 
prominent for the voyaging traditions of the Native Hawaiian people. 
Wailua was the primary entrance point to Kaua`i from the neighboring 
islands.
    Along the Wailua river are major historical and cultural sites, 
which continue to illustrate the significance of the Wailua river 
valley to the cultural backbone of the Native Hawaiian people. It is 
essential to the cultural continuity of the Native Hawaiian people and 
local Kaua`i communities that Wailua beach remain intact, physically 
and spiritually.
    The traditional name of Wailua beach is Alio. Early written 
documents and traditional Hawaiian literature indicate the name and the 
saying, as follows, ``na one kapu o Alio'', meaning, the kapu sands of 
Alio. This sand dune area on the beach is connected culturally and 
spiritually to the well-known ``Coco Palms'' property, separated 
physically by Kuhio Highway. An important traditional fishpond at Coco 
Palms is known as a ``loko pu`uone'' for its relation and proximity to 
the sand dune shoreline of Wailua beach. The Weuweu-Kawaiiki Fishpond 
has been nominated to the Hawai`i State Register of Historic Places. It 
is also highly associated with Kaua`i`s last reigning monarch, Queen 
Deborah Kapule, wife of King Ka`umuali`i of Wailua, Kaua`i.
    Kama`aina and visitors to Wailua are now able to experience the 
natural beauty of this magnificent and significant traditional cultural 
landscape in its entirety, as it should remain for all generations to 
come to experience.
    Our community believes that there are options to this proposed 
route which can be used. Specifically, we recommend a route mauka of 
Coco Palms that was identified as a viable alternative during the 
original Draft Environmental Assessment. This alternative includes a 
paved road and right of way that can easily be adapted for the Bike and 
Pedestrian Path, possibly at less cost then the proposed beach route.
    The essential point is that the route traversing Wailua Beach was 
selected using seriously flawed processes that did not comply with 
either the letter or spirit of Federal and State law. At the time the 
Finding of No Significant Impact was being prepared for agency 
signatures for the Draft Environmental Assessment, the State Office of 
Hawaiian Affairs declined to provide a signatory. This is likely due to 
the known extreme cultural and spiritual sensitivity of this area to 
the Native Hawaiian beneficiaries.
    The Section 106 process was flawed in that a specific cultural 
impact assessment was not done for the project, but rather borrowed 
from a study of the pending Kapa`a Relief Route EIS. Archaeological 
assessments of the area in question fell short of an Archaeological 
Inventory Survey, which was also not conducted for the specific route.
    The Final EA also acknowledged Section 106 consultation with 
specific individuals, some who recently indicated that they were either 
not consulted, or that their comments were not accurately portrayed. 
None of the Native Hawaiian cultural practitioners that have been 
contacted to review this process in the past few months have said it 
was appropriate to have a bike path on the beach at Wailua. Native 
Hawaiian cultural practitioners have said that it is not pono; that is, 
it is not right to have this bike path on Wailua beach.
    The construction plans also indicate significant design changes 
from that displayed in the Final EA conceptual designs. This includes a 
14-foot-wide synthetic wood boardwalk resting on support pylons that 
would penetrate approximately 8 feet into the sand and the plant life 
essential to the health of the beach and sand dune area. Estimates of 
the life of the boardwalk range from 2-10 to 15-20 years. The reality 
is that this beach adds and loses sand over natural cycles. It is 
impacted by tidal events, storms and frequent prevailing strong winds 
from the east, in this active coastal zone.
    Is anyone involved in this proposal prepared to guarantee that 
building this boardwalk on an essentially unstable and ever changing 
beachscape will withstand the first major storms and tides that hit it? 
Since there is a viable alternative that can be built on solid ground, 
why risk taxpayer's dollars on a controversial route that is opposed by 
the descendants of the original people who first settled these lands?
    Some have asserted that if the route is changed, the funds 
appropriated for this project will be lost. Local officials have 
testified before the Kauai County Council that the appropriated funds 
can be used for other sections of the bike path if re-working the 
Wailua route causes a delay. That said, it is our belief that if a 
decision to re-route the Wailua path is made expeditiously, no 
significant delay will result.
    Mr. Chairman, this route should not be allowed to proceed based on 
flawed processes and the certainty that it will be a profound insult to 
those of us who are descendants of the Native Hawaiians who inhabited 
this area for 2,000 years. The people in whose behalf these words are 
written are asking that our county and State officials re-consider the 
current proposed route.
    Finally, the National Parks system should provide protection for 
this area within the Wailua Complex of Heiau listed on the National 
Register of Historic Places. Wailua beach is at the center of the area 
of affect of the sacred coastal sites, and the traditional ``gateway'' 
to the historic and sacred Wailua River Valley, that leads to the 
source of the greatest waters on earth, Wai`ale`ale.
    We are a people of good will. We have sought collaboration. There 
is no reason why a project intended to provide pleasure and happiness 
to the people of our area should be implemented in a way that does 
injury to our history, our culture and our spirit.
                                 ______
                                 
  Prepared Statement of the Ironworkers Stabilization Fund, Local 625

    Chairman Inouye and members of this Committee, on behalf of Mr. T. 
George Paris and the Ironworkers Stabilization Fund, Local 625 thank 
you for this opportunity to appear before you regarding the American 
Recovery and Reinvestment Act (herein known as ARRA).
    We deeply appreciate your concern and steadfast support of the hard 
working men and women of the State of Hawaii. We would like to inform 
you of the Ironworkers view on the progress of how the ARRA funds are 
being spent. These funds were used to bring Hawaii and the Nation out 
of this worldwide recession. Due to President Obama and the United 
States Congress, Hawaii was allocated funds to assist in job creation 
and help our local economy.
    We believe that in general this is a great idea; however, due to 
the inaction of the Lingle Administration we have not seen a good 
amount of projects starting. Per a letter by Chairman Oberstar, 
Chairman of the House Committee on Transportation and Infrastructure, 
dated August 6, 2009 Mr. Oberstar stated: ``Hawaii is ranked 50 out of 
51 for States submitting projects for the Recovery Act.'' We consider 
this reprehensible and hope that you can assist in request the Lingle 
administration to create a rapid response team to have these projects 
shovel ready to submit.
    Additionally, we know that the intent of this bill was to assist 
the local economy by creating jobs for the local people. Not for 
outside entities to get the jobs and send the money out of State. As 
such, we hope there is a rule that States that the funds were to create 
stimulus in the local economy by allowing local companies to get the 
jobs. Or more importantly have all the companies hire people that live 
and work in the State and not have people from the mainland come into 
our State and take our jobs.
    In conclusion, we applaud the efforts of this committee to support 
our local economy. We would hope that you encourage the Lingle 
Administration to submit more projects for these funds and ensure all 
the funds coming into the State will provide jobs for local people.
    Thank you.
                                 ______
                                 
           Prepared Statement of Hughes Network Systems, LLC

    Hughes Network Systems, LLC (``Hughes'') submits this testimony on 
the Senate Appropriations Committee hearing entitled ``Stimulating 
Hawaii's Economy: Impact of the American Recovery and Reinvestment Act 
of 2009.'' Hughes appreciates the hard work undertaken by this 
committee to help craft the American Recovery and Reinvestment Act of 
2009 (``ARRA'') \1\ and thanks the Chairman for the opportunity to have 
its views considered in this forum.
---------------------------------------------------------------------------
    \1\ American Recovery and Reinvestment Act of 2009, Pub. L. No. 
111-5, 123 Stat. 115 (2009) (``ARRA'').
---------------------------------------------------------------------------
    Our testimony informs the committee on challenges presented by the 
implementation of provisions in the ARRA that govern the disbursement 
of $7.2 billion in Federal funds to help States and communities improve 
their broadband connectivity.\2\
---------------------------------------------------------------------------
    \2\ The ARRA requires the Department of Commerce to establish the 
Broadband Technology Opportunities Program (``BTOP''). The Act further 
establishes authority for the Department of Agriculture to make grants 
and loans for the deployment and construction of broadband systems.
---------------------------------------------------------------------------
Background
    Hughes is the largest satellite Internet access provider to the 
North American consumer market, providing satellite broadband 
connectivity to more than 400,000 consumer and small business 
subscribers through its HughesNet service. Almost any consumer or 
small business across the country can subscribe to Hughes satellite 
broadband services at downstream speeds of up to 5 mbps. Hughes shares 
the belief of many policy makers in Washington, D.C. that the 
deployment of modern broadband networks is the critical infrastructure 
challenge of this century and is vital to the long-term competitiveness 
of the United States. Faster networks and more affordable broadband 
will benefit America's consumers and America's workers, and lead to 
enhanced economic growth and job-creation.
    Former Acting Chairman of the Federal Communications Commission 
(``FCC''), Michael Copps, recently opined that:

The goal of our national strategy must be to bring value-laden, high-
speed broadband to all our citizens, no matter who they are or where 
they live, rural or urban, affluent or needy, living in a comfortable 
condo or a not-so-comfortable tribal land, physically able or dealing 
with a disability. ``All'' must mean everyone.\3\
---------------------------------------------------------------------------
    \3\ Copps, Michael, J., American Recovery & Reinvestment Act of 
2009 Broadband Initiative Kick-Off, (Mar. 10, 2009), .

    Hughes shares this vision and is well positioned to expedite the 
delivery of high-speed broadband services to unserved Americans in 
Hawaii and across this country. Satellite technology by its design 
provides ubiquitous coverage that does not discriminate based on income 
or geography. It ensures that every household has access to at least 
one high-speed broadband provider. There are approximately 10 million 
residences and 3.5 million businesses, schools, and healthcare 
establishments unserved by wireline or wireless broadband today. 
Satellite is poised to deliver broadband service to these millions of 
unserved American consumers, businesses, hospitals, and schools 
tomorrow.
    Cost and speeds have traditionally stymied broadband penetration in 
rural and lower income areas. With the support of broadband stimulus 
funds, Hughes can immediately expand the reach of broadband throughout 
the country, dramatically decrease the upfront cost of equipment for 
satellite broadband subscribers, and increase the speeds delivered by 
satellite technology. To this end Hughes is seeking grant monies from 
NTIA and RUS to subsidize customer-premises equipment (``CPE'') 
purchases by consumers in unserved and underserved areas. As part of 
its proposals, Hughes has offered to reduce service plan pricing to 
participants in the NTIA and RUS programs. In keeping with the goals of 
the ARRA, Hughes has proposed additional discounts to public facilities 
that provide community services essential for supporting the safety, 
health, and well-being of residents, including, but not limited to, 
emergency response and other public safety activities, hospitals and 
clinics, libraries and schools, in order to improve the adoption of 
broadband connectivity.
    CPE subsidies can immediately deliver broadband to thousands of new 
customers in unserved and underserved areas in Hawaii that have been 
bypassed by terrestrial providers who have not extended their networks 
to these areas. Our proposal will, in turn, create new jobs for: truck 
crews; equipment contractors; marketing employees; and call center 
employees and extend the digital economy to the broadest possible 
number of homes and small businesses throughout Hawaii and across the 
country.
    Resultant increased consumer demand will likely exceed our capacity 
to deliver broadband in some regions across the country. Next 
generation satellites (delivering downstream speeds approaching 20 
mbps) will be necessary to expand significantly broadband service 
capability. Recent industry efforts to procure financing for such 
projects in the capital markets have proved difficult. The recent 
financial crisis and consequent tightening of the credit markets has 
only worsened capital investment in the industry. Grants from NTIA for 
a new satellite to increase capacity will ensure that enhanced 
satellite broadband services are available to many of the unserved and 
underserved households and businesses. Hughes is currently seeking a 
grant from NTIA to assist with the purchase of a new satellite to 
increase capacity and enhance broadband service in unserved and 
underserved areas.
    Hughes is excited to be part of the solution to the broadband 
infrastructure challenges before the United States and Hawaii today. 
However, we have very real concerns that the implementing rules 
promulgated by the NTIA and RUS for the broadband funds provided for 
under the ARRA effectively preclude Hughes from receiving an award 
during the first funding window.\4\ Set forth below are specific 
examples of the challenges these rules present for satellite 
technologies.
---------------------------------------------------------------------------
    \4\ See Notice of Funds Availability and solicitation for 
applications, 74 Fed. Reg. 33104 (July 9, 2009) (hereinafter ``NOFA'').
---------------------------------------------------------------------------
Challenges
    Congress made clear in ARRA that ``satellite carriers'' should be 
considered equally with wireline and wireless platforms in the 
distribution of broadband grants.\5\ The statute explicitly lays out a 
technology-neutral approach.\6\ The current rules do not achieve this 
balance and could exclude Hughes from consideration for funding awards.
---------------------------------------------------------------------------
    \5\ With regards to the BTOP program the Conference Report stated 
that ``it is the intent of the conferees that, consistent with the 
public interest and purposes of the section, as many entities as 
possible be eligible to apply for a competitive grant including 
wireless carriers, wireline carriers, backhaul providers, satellite 
carriers, public-private partnerships, and tower companies.'' (emphasis 
addded) H.R. Rep. No. 111-116 at 775 (2009).
    \6\ Section 6001(e)(1)(C) states that ``In establishing such 
[eligibility] rule[s], the Assistant Secretary shall to the extent 
practicable promote the purposes of this section in a technologically 
neutral manner.'' (emphasis added).
---------------------------------------------------------------------------
            Overlap Prohibition
    The current rules prohibit overlap of broadband stimulus projects 
funded under the ARRA.\7\ Satellite is a nationwide broadband service 
provider that by definition overlaps every proposed service area. The 
ARRA does not prohibit RUS from funding multiple projects even if they 
overlap with other RUS-funded projects; likewise, there is no similar 
prohibition on NTIA. The broadband provisions in the ARRA require a 
technologically neutral approach to the funding of broadband projects. 
The rules prohibiting overlap of funded projects clearly discriminate 
against satellite technology and a nationwide solution. Language 
limiting grants or loans to ``one per market'' should be clarified to 
reflect the unique nature of satellite services before future funding 
opportunities arise.
---------------------------------------------------------------------------
    \7\ NOFA at 33111.
---------------------------------------------------------------------------
            Contiguous Service Areas
    The current rules require that a proposed service area be composed 
of contiguous census blocks.\8\ Satellite provides a nationwide service 
to users in virtually all unserved or underserved rural and non-rural 
areas. Requiring that applications only propose to serve contiguous 
unserved areas discriminates against a technology that can serve 
virtually all unserved or underserved rural and non-rural areas.
---------------------------------------------------------------------------
    \8\ Id at 33130.
---------------------------------------------------------------------------
    Further, the current rules require a project covering multiple 
service areas receive the highest score in each service area it 
addresses in order for a project to be funded. A satellite application 
that proposes a nationwide solution could not receive the highest score 
in each service area and will likely be dismissed.\9\ The requirement 
that proposals serve contiguous census blocks and receive the highest 
score in each of the areas they proposes to serve effectively 
forecloses satellite technology from winning any broadband funds.
---------------------------------------------------------------------------
    \9\ During a recent RUS and NTIA sponsored Workshop on the 
Broadband Programs, RUS and NTIA representatives indicated that an 
application proposing a nationwide solution may be rejected wholesale 
if just one of the proposed service areas does not receive the highest 
score for a particular area. RUS and NTIA should clarify the rationale 
for requiring that a project covering multiple service areas receive 
the highest score in each service area it addresses.
---------------------------------------------------------------------------
            Overly Burdensome Mapping Requirements
    The current rules require that applicants undertake census block 
level broadband analysis for each area they propose to serve and 
require the use of a bulky, localized mapping tool that is not 
conducive to a national proposal such as satellite.\10\ This has the de 
facto effect of excluding nationwide applicants, such as satellite 
operators, who cannot devote thousands of hours to drawing a vast 
number of maps of proposed service areas in each local area, 
painstakingly including some census blocks and excluding others. What 
would be more straightforward and better serve the public interest 
would be for nationwide service providers such as Hughes to be able to 
submit an application indicating that it will serve customers in all 
unserved, underserved or rural areas, as the case may be, in accordance 
with a program that meets the requirements of the ARRA.
---------------------------------------------------------------------------
    \10\ NOFA at 33132.
---------------------------------------------------------------------------
    Hughes recently submitted three applications in response to the 
NOFA and, while it could not possibly draw the kind of maps required by 
the NTIA/RUS mapping tool, it was able with significant time and 
expense to produce data files totaling almost 400 megabytes and 
millions of spreadsheet lines for all rural, unserved and underserved 
areas in the United States. It is unclear what purpose was served by 
this massive effort, when the simpler approach outlined above would 
have likely yielded the same result.
            An Alternative Approach for the Next Funding Round
    While Hughes used its best efforts to meet the requirements of the 
NOFA and would like to see the improvements described above implemented 
if NTIA and RUS continue with their current approach, a simpler--and 
faster--approach for implementing broadband may be to fund broadband 
providers on a per subscriber basis for any new subscribers they 
connect in rural, unserved and underserved areas. Under this approach, 
NTIA and RUS would pay a flat subsidy amount, such as $750, to any 
broadband provider who adds a subscriber in a rural, unserved or 
underserved area during a 3-year period. The subsidy would offset the 
up-front costs associated with providing connectivity, customer 
premises equipment and installation. In the case of wireline providers, 
that would include the cost of pulling wire to the subscriber's home. 
For terrestrial wireless companies, that would include the cost of 
building towers and providing CPE. For satellite operators, that would 
include CPE and installation costs. The benefits of this type of 
program would include (1) expediting the roll-out of broadband service 
in rural, unserved and underserved areas, (2) adhering to the 
Committee's legislative intent of technology neutrality, (3) avoiding 
the scenario where the NTIA and RUS are picking winners and losers and 
unfairly distorting competition, and (4) reducing the administrative 
burdens on NTIA and RUS in implementing broadband stimulus programs.
Conclusion
    Satellite is well positioned as an immediately deployable solution 
that provides ubiquitous coverage of unserved and underserved areas in 
Hawaii and across the country, regardless of geography or income. It 
must be a part of any national broadband strategy to bridge the digital 
divide. The Hughes proposals will lower upfront prices, increase 
broadband speeds, create jobs at the local level and drive broadband 
penetration. But we can not get started if the rules preclude us from 
having a seat at the table.
    We thank the committee for its continued oversight of these issues 
and stand ready to assist should it require further information.
                                 ______
                                 
                   Prepared Statement of Anna Chavez

    When we first heard about the idea of Kaua`i Bike Path, my husband 
and I were enthusiastic. We went to a meeting to learn about it. The 
promoters talked about their desire to increase healthy outdoor 
activity, recreation, alternatives to driving, and doing so in way that 
showed respect for island culture and local communities. We were 
thrilled to learn that government money and donated funds would be used 
to stimulate good jobs for local families, too.
    That was until we learned about the way in which the Kaua`i Path 
was proceeding at Wailua Beach. We are not lawyers, or experts. We're 
just residents who think that the county's plan to locate the bike path 
on the beach at Wailua breaks an important promise to respect local 
culture. We want to see the Kaua`i Path get back on track and be 
relocated behind Coco Palms. We need help so that stimulus money that 
Kaua`i desperately needs will not be used to harm communities it is 
supposed to be supporting.
    There is no need for Kaua`i County to build a 14-foot-wide multi-
use synthetic wood boardwalk/alternate transportation lane on top of a 
sacred, culturally and environmentally sensitive beach in front of Coco 
Palms, near the mouth of the Wailua River. We are disappointed that 
bike path planners decided to build on top of one of the most important 
cultural historical sites in all of Hawai'i and Polynesia. Our Federal 
Government has acknowledged this special historical treasure in a 
Landmark area that surrounds two National Historic Registry sites, and 
one site that is in Nomination. There are alternative routes. We are a 
coalition who asks that the bike path planners take the path of least 
resistance in favor of community consensus.
    You will hear bike path planners assert that they have crossed 
every ``t'' and dotted every ``I'', going by the letter of the law as 
they applied for and obtained a ``Finding of No Significant Impact''. 
What they will not tell you is how flawed their applications and 
community consultation processes were. They will not tell you in detail 
what we are learning: that prominent environmental stakeholders were 
avoided, and Native Hawaiian cultural practitioners on Kaua`i were 
misquoted and their positions misrepresented.
    I am a lifetime member of the Sierra Club, and a member of Kaua`i 
Sierra Club's Executive Committee. I am not an environmental expert. 
And I am a relatively new resident of Kaua`i (4 years). But even my 
layperson's review reveals flaws in the process used by the bike path 
promoters. Taxpayers should know about this, especially those in other 
neighborhoods where the bike path is being planned.
    The bike path promoters' Preliminary Environmental Assessment and 
FONSI application relied on information from surveys on another section 
of coastline to the north in Kapa'a, where their first segment of bike 
path was built. They did not do a complete environmental assessment of 
Wailua, nor did they complete a required Cultural Impact Assessment. 
Furthermore, the State archeologist did not require an Archeological 
Inventory Study of this intensely sacred and special area adjacent to 
National Historical Registry landmarks.
    Some bike path promoters have suggested that they will now do a 
secondary survey to determine whether there are burial sites within the 
construction zone. They are proposing to ``monitor to 4 feet,'' when 
the project calls for augers that will anchor the boardwalk to 
penetrate to a depth of 8 feet. Burial remains alone do not determine 
the spiritual, sacred or historical significance of an area. And, 
according to my layperson's reading of the law, before they dig to 
check core samples for burial remains, there should have been cultural 
consultation with Native Hawaiians on Kaua`i.
    There has been the suggestion by path promoters that if they find 
burial remains during their digs, they will consult to rebury those 
remains in accordance with their interpretation of the law. The bike 
path promoters want to look for burial remains instead of speaking with 
individuals who can tell them first hand about the religious, cultural, 
spiritual historical sites that need protection and are designated by 
law to have it. The attitude this conveys is very disturbing.
    At present, Kaua`i's Native Hawaiian Burial Council is not 
complete. The county's plan to do ``burial site monitoring'' means that 
if graves are desecrated the State Historic Preservation Department, 
rather than the Kaua`i Ni'ihau Island Burial Council would decide on a 
burial treatment plan. Due to the avoidance of an Archeological 
Inventory Study by this same agency, the burials will be called 
``Inadvertent Finds''. Then, SHPD will have one day to determine 
whether to remove or preserve remains in place. There will not be an 
opportunity for recognized lineal or cultural descendants to provide 
input or to specify what should be done with the remains.
    Wailua is surrounded by ancient heiau, so it is highly probable 
there are significant unmarked burial sites and other prehistoric and 
cultural property located on the sandy dunes of Wailua Beach that will 
be affected or desecrated by this project. The lack of protections for 
this significant historic site constitutes a serious violation of 
public trust by the government. And the use of Stimulus Funds to 
desecrate Hawaiian remains is appalling, especially because an 
acceptable alternate route exists.
    Perhaps this is why OHA did not sign the path's original MOU for 
the FONSI application. Yet bike path promoters have in public 
repeatedly described OHA as offering support for building on the Wailua 
beach. I asked OHA about this to find out the truth. I was told that 
OHA is now looking at all the issues carefully, especially the views of 
Native Hawaiian cultural practitioners on Kaua`i. There are some who 
feel their views were not fairly or accurately included in the original 
process, and others who feel that their views or the views of their 
loved ones were misrepresented. As a non-Hawaiian resident of Kaua`i I 
am grateful for their care.
    The lack of environmental consultation and outreach during the 
``public comment'' phase raises more questions about the processes that 
path promoters followed. The proposal to build a 14-foot-wide synthetic 
wood bike path on Wailua a beach has obvious and far-reaching 
environmental impact. Kaua`i County has a very important coastal 
protection law in place. Why did the path promoters fail to contact the 
Sierra Club at the outset for consultation and input? The bike path 
promoters had been previously challenged by Kaua`i Sierra Club and had 
subsequently improved a previous section of the Kapa'a bike path. 
Sierra Club Executive Committee members reasonably felt that prior 
consultation would inform and assist bike path promoters as they 
proceeded with construction plans around the island. Their lack of 
community collaboration naturally raises reasonable questions about how 
much community input they sought and really wanted?
    In addition to incomplete, geographically inaccurate and misleading 
statements, bike promoters did not extend themselves to get thorough 
input from a true cross-section of resident stakeholders who currently 
use and enjoy the beach. The current plans for the bike path are within 
a complex of Federal, State, and county construction projects. The 
beach is enjoyed by many constituents, residents and visitors alike. It 
is safe to say that most local community beach users don't realize what 
is planned for Wailua, and don't know that their local traditional 
beach use and parking will be affected.
    Many foreseeable risks come with building a synthetic bike path on 
Wailua beach. The preliminary Environmental Assessment report 
acknowledges that the flexible path is moveable, and it will cause 
erosion on the beach. What path promoters do not discuss is the likely 
danger caused by a moveable path when strong seasonal storms and river 
floodwaters result in large debris, or large waves crashing onto the 
path. The bike path is a planned transit corridor across Wailua Beach. 
But in the event of a hurricane, the moveable bike path along the 
surging ocean would not be a safe evacuation route. If it were moved 
inland, behind Coco Palms, the path would be safer and more readily 
available for emergency use.
    Bike path promoters say that they want to bring resort amenities to 
the coastline, but who are those amenities for? The bike path promoters 
they have not measured the dramatic impact of such development to this 
historical area. They have not even measured the amount of litter that 
amenities are likely to bring. Nor have they estimated chemical run-
off.
    A quick look at the web sites for synthetic wood manufacturers will 
show that in moist climates, such products mold and mildew, and they 
can become hazardously slick. Reducing the hazard of a slippery multi-
use transit corridor will require routine chemical treatment and power 
washing. The county anticipates the burden of this added maintenance. 
But in this time of shrinking budgets, will they choose to clean the 
mildew and mold with a more expensive frequent-use eco-sensitive 
product, or salt-based and chlorine-based chemical compounds more 
commonly used? Whatever they use and wherever they build, it will run 
into the water. What will the impact of that be on the fish, reef and 
sea life, as well as the monk seals and sea turtles that rest on the 
beach?
    Wailua, or ``Alio'' beach, is the last open beach on the east side 
of the island of Kaua`i. And though the Kaua`i bike path promised 
cultural education and sensitivity, one wonders what they plan to put 
on their pineapple-themed interpretive signs? What euphemisms can they 
use? The cruel irony of this is that the path would need to explain the 
very harm it created as yet another chapter of cultural discrimination, 
and the ongoing degradation of a sacred and important area. In fact, 
signs on top of the path would be symbols of systematic violations of 
civil rights on the anniversary of statehood: the ongoing violation of 
rights of freedom of religion, equal protection, as well as guarantees 
of life, liberty and the pursuit of happiness. I do not want taxpayer 
or donated dollars used for this purpose.
    A growing coalition of concerned citizens supports the efforts 
being led by Native Hawaiian cultural practitioners on Kaua`i. Small 
groups have testified at meetings with path promoters. We've met with 
our Mayor, who has thoughtfully listened to all points of view. We've 
testified before our county council, and our planning commission. We've 
walked alternate routes with State and Federal Department of 
Transportation officials who agreed that the alternate route on an 
existing county-owned cane road has advantages. We have reached out to 
OHA and appreciate their ongoing careful evaluation. We have met with 
Anne Stewart, Chief of Staff of our Congressional Representative Mazie 
Hirono. And we are appealing to our U.S. Senators for their assistance 
on this county project using Federal funds.
    We humbly ask you to help us in persuading our officials to do the 
right thing for our community by make sure the stimulus money is used 
to build the bike path mauka of Coco Palms.
    For now, the false choice between respecting the land and people 
and getting the stimulus money continues to be used by the bike path 
promoters. When groups of citizens approached bike path organizers to 
suggest the alternate route, they were told that a new environmental 
assessment for the alternate route would take 12 months or longer. 
However, county and DOT officials have told us it could take 90 days. 
Yet in public testimony last month, Doug Haigh, chief of county 
building construction who oversees this project, said that the project 
could go forward and the rerouting would not necessarily cause the loss 
of funds because other parts of the bike path could be worked on right 
away.
    No one voted on this huge project to go put a ring around Kaua`i. A 
non-profit proposed it and the county adopted it. And while many 
constituents enjoy the first section that was built as a concrete path 
in Kapa'a, other sections are being planned and permitted by local, 
State and Federal agencies. But the community outreach for one section 
is not identical for the whole island. Hard-working people, and 
families in each neighborhood on Kaua`i don't always have the luxury of 
attending long, late meetings to personally give their input on all-
important matters. So here on Kaua`i the duty of care of government, 
and the legal outreach for community input reasonably includes 
collaboration with representatives of existing, well-known, readily 
accessible organizations. Taxpayers and residents who did not attend 
meetings deserve no less.
    This is a good moment for Kaua`i bike path promoters to demonstrate 
their good faith and take steps to unify the community behind their 
project. This is an opportune time for them and their consultants to 
refresh their ``best practices'' in community outreach, public 
relations and collaboration. It will take longer and be harder for them 
to achieve their goals unless and until they can be trusted to keep 
their promises and treat each community with respect.
                                 ______
                                 
           Prepared Statement of the Hawaii State Legislature

    When Congress adopted the American Recovery and Reinvestment Act of 
2009 this spring, we were heartened to see that the Federal stimulus 
program included provisions that offer meaningful assistance to States 
vis-a-vis high-speed broadband deployment.
    However, we have since learned that the NTIA notice of funding 
availability (NOFA) unfortunately precludes important stakeholders like 
State educational institutions, healthcare providers and libraries from 
being able to apply and qualify for STOP funding for broadband 
infrastructure. Since Hawaii is the only State with the added financial 
burden of connecting with the continental United States, we are 
concerned that NTIA's present NOFA criteria severely limits our 
participation in President Obama's vision of high-speed broadband as a 
driver for economic recovery.
    We therefore join in endorsing the recommendations made by the 
Schools, Health and Libraries Coalition (see attached July 14, 2009 
letter); and request the U.S. Senate Committee on Appropriations to 
seek NTIA's commitment to issue an addendum to its NOFA and application 
deadlines regarding the importance of service to State anchor 
institutions.
    Thank you for considering our comments.
                                 ______
                                 
                                                     July 14, 2009.
Hon. Larry Strickling,
Assistant Secretary of Commerce, Administrator, National 
        Telecommunications and Information Administration, U.S. 
        Department of Commerce, Washington, D.C.
    Dear Assistant Secretary Strickling: The members of the Schools, 
Health and libraries Broadband Coalition congratulate you on the 
release of the Notice of Funds Availability (NOFA) and other 
application materials to implement the Broadband Technologies 
Opportunities Program (BTOP). You and your staff should be proud to 
have provided the public with such a thoughtful and detailed set of 
rules concerning the operations of this critical program. We believe 
that the STOP program can, with just a few changes, bring enormous 
benefits to the American public.
    While we appreciate the complexity of this undertaking and the 
short amount of time that NTIA was given to put these rules together, 
we are somewhat disappointed that anchor institutions such as schools 
(including K-12, colleges and universities), libraries and healthcare 
providers were not given a higher priority in the BTOP program. 
Broadband service to these anchor institutions was specifically listed 
as one of the five priorities in section 6001 of the American Recovery 
and Reinvestment Act. We believe that these critical strategic 
institutions should be given the highest priority for funding because 
they provide essential educational and medical services to millions of 
American consumers every day, These institutions require very high-
capacity broadband connections--100 megabits to 1 gigabit and higher--
to provide distance learning, remote medical imaging, on-line job 
training, and many other critical services.
    Unfortunately, the NOFA does not reflect these critical needs, We 
are concerned that the rules for these programs will make it difficult 
or impossible for many anchor institutions to apply for and/or receive 
funding for the broadband connections that they need. For instance:
  --The NOFA adopts a single definition of broadband (768 kbps 
        download) that is inadequate for anchor institutions. While we 
        appreciate that flexibility for projects intended to serve 
        other populations or entities, it is not adequate for anchor 
        institutions, We suggest that applicants should be encouraged 
        to meet a separate broadband metric requiring facilities 
        capable of delivering 100 megabits per second to 1 gigabit per 
        second or higher when serving schools, libraries, and 
        healthcare institutions. Even though some anchor institutions 
        may only be able to subscribe to a lower service offering 
        today, their broadband connection should be easily upgradeable 
        and capable of delivering higher speeds as demand grows.
  --The NOFA applies the terms ``unserved'' and ``underserved'' to 
        anchor institutions, even though the statutory language does 
        not. (In the statute, these terms only apply to residential 
        consumers.) The result is that thousands of libraries, K-12 
        schools, colleges and universities, hospitals, health clinics, 
        and other anchor institutions in urban and suburban areas that 
        provide critical services to the public will not be eligible 
        for STOP funding. We respectfully ask that notions of 
        ``unserved'' or ``underserved'' not be applied to anchor 
        institutions.
  --The NOFA does not give specific scoring ``points'' for applications 
        that provide high-capacity broadband service to anchor 
        institutions and generally does not provide sufficient 
        incentives to service providers to build broadband networks to 
        anchor institutions. In order to ensure that service providers 
        have sufficient incentives to serve anchor institutions, points 
        should be given for applications that seek to connect anchor 
        institutions with broadband connections of 100 megabits per 
        second to 1 gigabit per second or higher.
  --The NOFA places the burden on the applicant to demonstrate that its 
        area is ``unserved'' or ``underserved'' even though this 
        information is held on a confidential basis by service 
        providers. A service provider could potentially derail a 
        legitimate application to serve anchor institutions by 
        submitting proprietary information about the level of service 
        in the area that the applicant has no opportunity to review or 
        contest. In order to address this concern and ensure that 
        applicants have sufficient incentives to serve anchor 
        institutions with high-capacity broadband, we ask that the 
        unserved and underserved distinctions not apply to connecting 
        anchor institutions and that applicants be given an opportunity 
        to review and contest any information provided by a service 
        provider.
  --The NOFA may prohibit a private sector award winner from selling or 
        leasing its network for 10 years, which may discourage private 
        sector applicants from partnering with anchor institutions to 
        deploy high-capacity broadband service. To ensure that private 
        sector entities have a greater incentive to work with anchor 
        institutions to provide high-capacity broadband connections, we 
        ask that this requirement be modified. We do, however, strongly 
        believe that public interest standards present in the Recovery 
        Act and NOFA as statutory contractual obligations should not be 
        evaded by any sale or leasing of the network.
  --We appreciate the guidance that applications to provide service to 
        anchor institutions will be considered for Middle Mile funding, 
        that anchor institutions are not required to provide service to 
        the surrounding residential community, and that only one census 
        block must be unserved/underserved. However, the NOFA and the 
        Application itself do not always reflect this guidance. For 
        instance, questions #14 and #18 in the Application appear to 
        assume that applications from anchor institutions will serve 
        the surrounding community. We are also somewhat confused by the 
        request for information about ``contiguous census blocks''. 
        This information request does not appear to be compatible with 
        a plan to build a fiber ring (to pick one technology plan for 
        illustrative purposes) that serves only anchor institutions. 
        Further clarification of how anchor institutions may apply for 
        funding only to serve those anchor institutions with high-
        capacity broadband would be appreciated.
  --As a general matter, there is very little discussion in the NOFA or 
        the application materials concerning the relationship between 
        the BTOP programs and the ``E-rate'' program. In theory, these 
        two programs should be complementary, but the rules do not 
        clearly explain how to ensure that they are compatible. Further 
        clarification of the interaction between these programs would 
        be extremely useful.
    Many Federal officials, including yourself in your opening comments 
at the July 7, 2009 workshop, have recognized the need for anchor 
institutions to have high-capacity broadband. We frequently heard that 
the intention of the program is to assist anchor institutions obtain 
high-capacity broadband, but this intention is not always reflected in 
the language of the NOFA. For this reason, we respectfully request that 
NTIA issue an addendum to the NOFA and to the application guidelines 
recognizing the importance of service to anchor institutions and 
reflecting the points noted above. In addition, we also ask that any 
future NOFA reflect the positions outlined above.
    Once again, we are truly impressed with the high quality and 
professionalism of the work that has gone into the preparation of the 
NOFA. In many ways, the NOFA seeks to meet the overall goals of the 
legislation and the needs of the public for greater broadband 
capabilities. Nonetheless, we feel obligated to request these 
clarifications because of the priority given to anchor institutions in 
the statutory language and because high-capacity broadband connections 
to schools, libraries and healthcare entities are so critically 
important to the essential services they provide to millions of people 
every day.
            Sincerely,
                                      John Windhausen, Jr.,
    Coordinator, Schools, Health and Libraries Broadband Coalition.
                                 ______
                                 
    MEMBERS OF THE SCHOOLS, HEALTH AND LIBRARIES BROADBAND COALITION

           (46 Members--Updated as of Monday, July 13, 2009)
    Sean McLaughlin, Access Humboldt; George Boggs, American 
Association of Community Colleges; Mary Alice Baish, American 
Association of Law Libraries; Kristin Welsh, American Hospital 
Association; Lynne Bradley, American Library Association; Shmuel Feld, 
Benton Foundation; Jill Nishi, Bill & Melinda Gates Foundation; Malkia 
Cyril, Center for Media Justice; Dee Davis, Center for Rural 
Strategies; Susan McVey, Chief Officers of State Library Agencies; Don 
Means, Community Telestructure Initiative; Keith Krueger, Consortium 
for School Networking; Joel Kelsey, Consumer's Union; Gene Wilhoit, 
Council of Chief State School Officers; Lillian Kellogg, Education 
Networks of America; Wendy Wigen, EDUCAUSE; Ben Scott, Free Press; H. 
Stephen Lieber, Healthcare Information and Management Systems Society 
(HIMSS); Rick Whitt, Google Inc.; Hilary Goldmann, International 
Society for Technology in Education; Marianne Chitwood, Indiana's 
Higher Education Network (I-Light); Gary Bachula, Internet2; Bob 
Handell, KeyOn Communications; Mike Phillips, Lonestar Education and 
Research Network; Amalia Deloney, Main Street Project; Andrew J. 
Schwartzman, Media Access Project; Beth McConnell, Media and Democracy 
Coalition; Todd Wolfson, Media Mobilizing Project; Don Welch, Merit 
Network, Inc.; Paula Boyd, Microsoft; Helen DiMichiel, National 
Alliance for Media, Arts and Culture; Alex Nogales, National Hispanic 
Media Coalition; Tom West, National Lambda Rail (NLR); Steve Solomon, 
National Medical Wireless Broadband Alliance, LLC.; Alan Morgan, 
National Rural Health Association; Michael Calabrese, New America 
Foundation; Tim Lance, New York State Education and Research Network 
(NYSERNet); Joe Freddoso, North Carolina Research and Education 
Network; George Loftus, Ocean State Higher Education & Administrative 
Network (OSHEAN); Harold Feld, Public Knowledge; Jen Leasure, The 
Quilt; Brian Quigley, Sunesys; Deanne Cuellar, Texas Media Empowerment 
Project; Cheryl Leanza, United Church of Christ; Susan Benton, Urban 
Libraries Council; Amina Fazlullah, U.S. Public Interest Research Group 
(USPIRG).
                                 ______
                                 
         Prepared Statement of Maui Economic Opportunity, Inc.

    Aloha Chairman Inouye and committee members, mahalo for the 
opportunity to present this testimony before you today on the 
implementation of the American Recovery and Reinvestment Act within the 
State of Hawaii.
    Maui Economic Opportunity, Inc. is a 45-year-old community action 
agency. The war on poverty, initiated by the Economic Opportunity Act 
of 1964 created agencies like ours to alleviate the affects of poverty 
and help people in need become self-sufficient.
    Since 1965 our agency and the people Maui County and the State of 
Hawaii have benefited from a close relationship with Federal agencies 
such as Labor, and Health and Human Services. The opportunity created 
for maximum feasible participation through local agencies like ours 
helps the communities we serve have a positive stake in the 
implementation and success of programs that we operate.
    Historically we have operated and continue to operate Federal 
programs like Community Services Block Grant, Head Start, Low Income 
Home Energy Assistance Program, Weatherization Assistance Program, 
Senior Community Service Employment Program, and The Emergency Food 
Assistance Program.
    The American Recovery and Reinvestment Act afforded community 
action agencies to be on the front line assisting the Federal and State 
governments with the economic recovery of our nation and our 
communities. Working closely with Federal, State and county 
governments, we are one of the largest non-governmental groups 
supporting the recovery efforts.
    As an example, MEO is currently operating seven ARRA initiatives. 
These ARRA funded programs include: Corporation for National Service--
AmeriCorps; Community Services Block Grant; Head Start; Homeless 
Prevention and Rapid Re-housing; Senior Community Services Employment 
Program; Summer Youth Employment Program; and Weatherization Assistance 
Program.
    In all, MEO expects nearly $4 million of ARRA funds. While small 
compared to capital projects, they are a large investment in the 
recovery of the people affected by this recession. We have designed 
these programs within the parameters allowed to increase job 
opportunities and training for high-growth areas such as green jobs, 
healthcare and education.
    The State oversees the implementation of most of these programs. We 
are working closely with various State agencies such as, the Hawaii 
Public Housing Authority, Department of Labor and Industrial Relations, 
the Office of Community Services and the University of Hawaii. We also 
have the opportunity to work with the U.S. Department of Health and 
Human Services and the Maui County Workforce Investment Board for two 
of the programs.
    As of today, we have received contracts for and have started 
implementation of all but one of the programs. One program, the Summer 
Youth Employment Program has exceeded its goal and is near completion. 
Required modifications to State plans and delay in Federal guidance 
have caused most of the difficulties.
    The provisions of the ARRA reflect the desire of Congress, the 
President and taxpaying citizens to ensure the Federal funds are being 
carefully spent and used to fund projects, create jobs and bolster 
support services. Everyone wants to make sure that fraud and abuse are 
prevented on all levels. The President's recovery.gov and regular 
agency updates seek to provide a transparency and oversight not common 
with other initiatives. This has put those responsible in Federal and 
State agencies on high alert and created a sense of caution that has 
caused delays in program implementation that would have otherwise been 
fairly routine. We appreciate the State's effort in interpreting the 
piecemeal guidance that has been forthcoming.
    The task of spending the stimulus money both wisely and quickly is 
a difficult one but not one that is insurmountable. Partnerships with 
agencies like MEO allow for the quick ramp up of resources to meet 
those needs. We have the experience, accountability and flexibility to 
be successful when given the chance.
    Thank you again for the opportunity to provide this testimony. If 
you have specific questions, I am available and pleased to address 
them.
                                 ______
                                 
      Prepared Statement of the West Hawai`i Explorations Academy

    Dear Chairman Inouye, and Honorable Members of the Senate Committee 
on Appropriations: West Hawai`i Explorations Academy Public Charter 
School, in the protection of its students and program integrity, 
formally requested the following draft element of the Kona 
International Airport Master Plan related to Airport Noise be 
reconsidered by the DOT, and revisited with officials of the FAA:

    ``As indicated in Chapter Four, there is one noise sensitive 
institution, the West Hawai`i Explorations Academy (WHEA), located 
within the 65 to 70 DNL contour range. The Federal Aviation 
Administration (FAA) has determined that WHEA is not eligible for 
funding from the noise set-aside portion of the Airport Improvement 
Program (AlP) as well as funding from DOT-A for sound insulation or 
relocation of facilities and trailers due to the structure of sub-
leases they currently have with the State of Hawai`i.'' (6-17)

    Pursuant to Executive Order 3074 signed by Governor Ariyoshi (1981) 
for ``Setting Aside Land for Public Purposes'':

    ``By this executive order, I, the undersigned, Governor of the 
State of Hawai`i, by virtue of the authority in me vested by Section 
171-11, Hawai`i Revised Statutes, and every other authority to me 
hereunto enabling, do hereby order that the public land hereinafter 
described be, and the same is, hereby set aside for the following 
public purposes:
    ``For an airport, and energy research project, and their associated 
purposes, to be under the control and management of the Department of 
Transportations (Airports Division), State of Hawai`i, and to be 
designated as the Keahole Airport, situate as O'oma 1st to Mahaiula, 
North Kona, Island of Hawai`i, Hawai`i . . .''

    The WHEA Community of students, staff and parents requested that 
DOT, in consultation with the FAA, carefully reconsider the current 
unsupportive assessment in the KOA Master Plan for noise mitigation. 
Dismissing WHEA's concerns under the ``structure of sub-leases they 
currently have with the State of Hawai`i'' in light of this Executive 
Order ignores entirely the longstanding relationship between our unique 
school, and the associated educational mission of the Natural Energy 
Laboratory Hawai`i Authority (the ``Energy Research Project'' specified 
in EO 3074).
    While WHEA does not claim equal standing as the ``airport'' or the 
``energy research project'' our 15-year track record as a public school 
partnering with NELHA in fulfilling environmental and energy education 
missions certainly suggests enhanced standing under this executive 
order. States may employ various instruments to establish land tenure, 
executive orders being just one, and therefore, the nuances of this 
situation clearly suggest it would be prudent to re-examine whether 
assistance in relocating out of the significant sound impact zone can 
be provided under Part 150.
    It would also be prudent to consider ARRA funding as a possible 
means to assist the school, since both FAA and Hawai`i DOT have 
qualifying program priorities. It should be noted that WHEA is an 
award-winning, nationally recognized model school focused on STEM 
education and replicable curricular practices. The relationship between 
NELHA and the airport expansion makes WHEA a perfect fit to participate 
as an educational component for both.
    As an illustration, WHEA's largest educational initiative is our 
Aloha Kai Tours. WHEA has attracted an estimated 20,000 visiting school 
children from across the State, who have toured the campus to learn 
about NELHA and WHEA student projects. In addition, WHEA has promoted 
alternative energy, and environmental stewardship throughout the entire 
West Hawaii Community. It is currently a STEM partner with UH on a CAD 
``Makery Cloud'' project, and is planning solar car, and aeronautics 
projects starting later this year.
    As mentioned previously, this is a nuanced situation.
    WHEA is not a just your run-of-the-mill ``incompatible use'' that 
happens to be near an airport. In June of 2008, WHEA received the 
Governor's Innovation Award. In 2005, it won the prestigious Intel and 
Scholastic Schools of Distinction Award. WHEA's Hawai`i State 
Assessment scores consistently rank near the top for secondary schools. 
There is a clear community desire to have WHEA continue operations as a 
part of the NELHA and Kona community.
    We believe under Title 14 CFR Part 150, the presence of increased 
noise impacts due to the KOA expansion raises specific concerns.
  --That the noise mitigation programs are in fact able to provide 
        assistance, but are reluctant to be based on a technicality of 
        law;
  --That the community's desire to maintain this highly successful 
        public school in NELHA is not being respected therefor;
  --That sound impacts on children are potentially being glossed over 
        based on incomplete information in the KOA master plan;
  --And, finally, that there has been broad reluctance to even consider 
        WHEA as a fit for ARRA program support, despite the need for 
        timely assistance to mitigate the impacts of the airport 
        expansion.
    Specific to Item #3, ``Discussions with school staff and a review 
of flight track data indicate that departure turns over the school do 
occur but are not very frequent. In addition, this school plans to 
relocate to a site outside the 65 DNL noise exposure contours. 
Therefore, special noise abatement departure procedures are not 
necessary at this time'', and ``the school is planned to be relocated'' 
would lead the reader to believe that it is all but taken care of. This 
is far from true. WHEA had begun conceptualizing a move within a 15- to 
20-year time frame as of 2004, with obtaining outside financing and 
State CIP as the obvious processes. That window is now just 4 to 6 
years under the master plan. In short, relocation before the increase 
noise impacts occur just became nearly impossible without additional 
consideration or support.
                                 ______
                                 
      Prepared Statement of the Hawaii State Teachers Association

    Chair Inouye and Members of the Committee: Thank you for holding 
this hearing and giving teachers, public school staff and everyone who 
cares about the future of Hawaii's public education system the 
opportunity to provide input on the importance of Federal stabilization 
funds.
    Hawaii's public school teachers deeply appreciate the effort made 
by you and our congressional delegation to ensure our students continue 
to receive the educational programs and services they need and deserve. 
The stabilization funds are critical to keep our teachers teaching and 
our students learning.
    Unfortunately, the State administration has not followed the spirit 
in which these appropriations were made. Instead, the administration 
has put in funds with one hand and taken even more money out of the DOE 
budget with the other. This completely violates the purpose of the 
Federal appropriation as we understand it. By putting the Federal funds 
in for 1 fiscal year and then cutting the DOE by a greater amount the 
following years, the administration has undermined the intent of 
President Obama and Congress to soften the blow to our students and 
their schools.
    I would also like to thank the members of the Board of Education 
for their efforts to protect the students in the classroom from the 
full impact of the cuts being made to the DOE. Hawaii's teachers 
understand board members have to make a number of tough decisions and 
no program, group or individual can entirely avoid the effects of the 
DOE's financial crisis.
    Our teachers especially appreciated the board's recommendation that 
the governor apply for Federal stabilization funds and use them as 
Congress intended, in order to minimize damage to our public schools. 
In our testimony today we want to highlight the fact that teachers need 
both instructional days and preparation time to do their jobs 
effectively. Cutting funding means reducing one or both of these 
essential needs in the coming years when the full force of the cuts 
hits.
    Teachers already use part of their own pay to enhance the learning 
environment in their classrooms, to ensure students have the necessary 
supplies and materials, and to provide help with field trip costs, 
lunch money and other monetary needs the families of some students just 
cannot afford. Even so, teachers remain willing to do more. But while 
my colleagues and I understand that everyone must make sacrifices 
during this fiscal crisis, we cannot lose sight of our priorities or 
our future.
    A child is only 7 once, and now is not the time to turn our backs 
on Hawaii's future doctors, lawyers, artists, and teachers. Despite the 
difficulties we face, we need to continue investing in students by 
investing in education. We appreciate everything you have done in this 
area and hope you will be able to continue to provide this much needed 
support.
    Thank you very much.
                                 ______
                                 
                  Letter From Senator Daniel K. Inouye
                                                September 23, 2009.
Hon. Linda Lingle,
Governor, State of Hawaii, State Capitol,
5th Floor, Honolulu, Hawaii.
    Dear Governor Lingle: Thank you for your letter following up on the 
recent Senate Appropriations Committee hearing in Honolulu on August 
24, 2009. Please be assured that your letter will be made part of the 
hearing record.
    I appreciated your comments, and the strides your administration 
has made in moving the Hawaii Clean Energy Initiative forward. It is 
the correct path to take and to continue to persevere even in this most 
difficult of economic times. As I have stated in the past, had Hawaii 
stayed the course in the 1970's after the Arab oil embargo, just 
imagine where Hawaii would be today, particularly in the development of 
our geothermal energy and ocean thermal energy conversion (OTEC).
    Nonetheless, we must move forward based on current circumstances, 
once again committing ourselves to reduce our dependency on foreign 
oil. I congratulate you and Hawaiian Electric Company for working 
together toward an ambitious goal of 70 percent clean energy by 2030. 
We must acknowledge that a large part of the collective success has 
been due to the U.S. Department of Energy's commitment of financial 
resources and technical expertise, much of which can be attributed to 
Special Assistant and State of Hawaii Liaison Bill Parks. He has, 
without question, been a resource to me and my staff.
    From what I understand, Mr. Park's comments related to your veto of 
the barrel tax which would have provided an important source of 
matching funds to be used in the ongoing energy grant competitions 
arising from the American Recovery and Reinvestment Act (ARRA). As you 
know, research and development solicitations require a 25 percent local 
match, and demonstration solicitations require a 50 percent local 
match. Having the barrel tax monies would have allowed Hawaii to bid 
for many more projects than we are presently able to because of the 
inability to put up a local match.
    What's done is done. We need to chalk it up as a missed opportunity 
and move on. The Hawaii Clean Energy Initiative provides the framework 
to be a national model. It remains incumbent on all of us to propel the 
numerous projects forward which include the underwater transmission 
cable, smart grid, battery and storage upgrades, OTEC and numerous 
other defense-led endeavors. In this regard, it is imperative that 
smart, strategic investments are made with the $25.9 million the State 
received in ARRA energy efficiency funds to further this goal. I 
appreciate the detailed breakdown of your plans for these funds that 
was included in Director Liu's testimony. I encourage your 
administration to work closely with my office in order to prioritize 
our Federal investments.
    I am committed to a greater clean energy future for Hawaii, and am 
presently working toward an enduring Federal energy presence in Hawaii. 
I believe that the broad array of expertise that Bill Parks brought to 
Hawaii will continue to be critical to our collective ability to reach 
your goal of 70 percent clean energy by 2030.
    Thank you again for your letter.
            Aloha,
                                          Daniel K. Inouye,
                                             United States Senator.
                                 ______
                                 
          Letter From Linda Lingle, Governor, State of Hawaii
                                                 September 1, 2009.
Hon. Daniel K. Inouye,
United States Congress,
722 Hart Senate Office Building, Washington, D.C.
    Dear Senator Inouye: I appreciated the opportunity to appear before 
you and Senator Akaka last week to discuss Hawaii's economy and the 
role of the American Recovery and Reinvestment Act (ARRA). As indicated 
in my verbal and written testimony, the ARRA funds will play an 
important role in helping Hawaii address its current economic 
challenges over the next several years.
    You indicated during the hearing that you would keep the committee 
record open to allow for supplemental comments: I would like to take 
this opportunity to correct an impression that may have been conveyed 
in the testimony offered by Mr. William Parks, a member of the staff of 
the U.S. Department of Energy.
    Mr. Parks, in his verbal and written testimony, expressed concern 
about State funding for energy activities. I believe these concerns are 
misplaced and I would like to clarify that my administration has 
devoted significant fiscal and personnel resources in pursuing Hawaii's 
Clean Energy Initiative and will continue to do so.
    More than 3 years ago my administration launched our Energy for 
Tomorrow program, recognizing Hawaii had to significantly reduce our 
dependence on imported fossil fuels. At that time, we restructured the 
Strategic Industries Division within the State Department of Business, 
Economic Development and Tourism (DBEDT) and added additional staffing 
to the Public Utilities Commission. The Commission is playing a 
critical role in the regulatory changes that are necessary to promote 
and encourage renewable energy projects.
    Most recently, despite a serious general funds gap in the State 
budget, my fiscal year 2010-2011 biennium budget included an internal 
reallocation of 30 positions and $6.6 million in funding to support the 
Hawaii Clean Energy Initiative (HCEI) within DBEDT. This reflected my 
administration's recognition that HCEI was creating promising 
opportunities and positioning Hawaii to be a leader in renewable energy 
development. Our partnerships with the U.S. Department of Energy, 
Hawaiian Electric Company, Project Better Place, Phoenix Motorcars, and 
other clean energy projects are a testament to this effort that will 
pay dividends in the years ahead.
    Although the State Legislature did not approve portions of our 
biennium budget proposal, the Strategic Industries Division within 
DBEDT has been able to effectively use Federal grants to supplement 
State funds to keep our efforts on track. I want to personally thank 
you for your support in obtaining Federal funding.
    My administration and I look forward to working with you to 
continue the progress we have made in the clean energy arena. Thank you 
for the opportunity to clarify this matter.
            Sincerely,
                                                      Linda Lingle.

                         CONCLUSION OF HEARING

    Chairman Inouye. So, to all of you, I thank you, and with 
that, the hearing is recessed. Thank you.
    [Whereupon, at 12:38 p.m., Monday, August 24, the hearing 
was concluded, and the committee was recessed, to reconvene 
subject to the call of the Chair.]

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