Frozen Investments Could Have Helped Solve State Budget Crisis
One-third of the state’s $1 billion investment in student-loan-backed auction-rate securities came from the general fund, says Hawaii State Auditor Marion Higa. That’s cash that could have been used to prevent cuts to balance the state budget.
As the state cut senior programs and health services to resolve a $1.2 billion deficit, the question remains: How much of the invested funds – which were supposed to be accessible but are now essentially frozen – could have been used to relieve the deficit?
We took a look at what $333 million in general funds could have bought the state, based on budget estimates for fiscal year 2011:
- 28 percent of the $1.2 billion state deficit in March 2010.
- 4.9 Furlough Friday plans crafted by the Legislature (at $67 million a plan).
- 3.6 Furlough Friday plans crafted by the Hawaii Teachers Association (at $92 million a plan).
- 1.2 delayed tax refunds (at $275 million a refund).
- About 14 Hawaii Land and Natural Resource Departments (at 23.4 million a year).
- 11.6 state library systems (at $28.8 million a year).
To see how the auditor estimated that one-third of the frozen investments came from the general fund, we’ve written a short backgrounder.
The auditor’s March 2010 report didn’t detail which funds the $1 billion came from. The Hawaii Senate adopted a establishing a committee to oversee an investigation of the Department of Budget and Finance‘s handling of the investment.
When asked where the money invested in the securities came from, the department responsible for making the investments refused to comment, citing legal investigations into the securities.
“I don’t want to be involved in any more discussion,” said Georgina Kawamura, director of the Hawaii State Department of Budget and Finance. “We’ve said enough.”
