A Cayetano Retrospective
Benjamin Cayetano: First highest-ranking elected official of Filipino ancestry in the State of Hawai‘i: 7th in a series.
Gilbert S.C. Keith-Agaran
Editor’s Note: 2019 marks the twenty-fifth anniversary of the election of Benjamin J. Cayetano as the Fifth Governor of the State of Hawai‘i and the first Filipino-American elected as the head of an American state. This is the seventh in a series of articles profiling Cayetano and his historic election and service. Versions of these articles appeared previously in The Filipino Summit.
Bearer of bad newsUnder John Waihe‘e, Lt. Governor Ben Cayetano’s signature accomplishment was the creation of the A+ After School Program. A self-described latchkey kid growing up in Kalihi, Cayetano understood instinctively the role that public schools and extracurricular activities played in communities where both parents worked and often, both parents worked more than one job. Cayetano left Hawai‘i in the 1960s with his young family to pursue higher education after losing out on a promotion in a laborer job (unfairly passed up in his mind). In his assessment, the public schools and the University of Hawai‘i remained key for Hawai‘i residents who couldn’t or wouldn’t leave the islands for further opportunities.
So nothing in his tenure as Governor grieved Cayetano more than the extended Death of Education protests by University faculty and local college students.
The State Budget woes were not expected. The 1994 election was fought on ideas and ambitious plans by all three major candidates—Frank Fasi, Pat Saiki and Cayetano—to move Hawai‘i hurtling to the 21st Century. Since Statehood, Hawai‘i’s economy had expanded. Most expected growth would continue.
As the great “Bearer of Bad News” Earl Anzai remembers, Governor Waihe‘e’s last financial plan indicated a comfortable balance in the General Fund—the catch-all bucket for most State tax and fee collections. But the incoming Cayetano Administration discovered problems when they analyzed the assumptions in the projected revenues.
“Lucky we had Neal [Miyahira] and Wayne [Kimura] … already on board,” Anzai noted. “It was essential that we moved fast and were correct in our reassessment.” Longtime Cayetano aides Miyahira and Kimura had moved over to Budget and Finance from the Lt. Governor’s office. Like their boss Anzai, the duo were candid and bright but perhaps not as patient as the fairly stoic Budget Director. While Anzai was pursuing his law practice, the two had helped organize and implement the various initiatives pursued by Cayetano as Lt. Governor.
The fiscal reality faced by the Cayetano administration meant that requests approved in the Waihe‘e Administration financial plan had to be reduced. In fashioning a budget, proposals percolate from the agencies to the Governor’s office and Budget department where they are analyzed and justified given the expected revenues available. A new Governor’s team starts with the inherited plan and looks to amend that proposal with their own priorities.
But ambitious new programs and expansion on initiatives—things Cayetano had campaigned on—could not be pursued. Those ideas, Anzai ruefully summarized, were reduced to wishful thinking. “You can imagine how upset Ben was,” he recalls.
Further, the expected deficits in the general fund were too large to be eliminated by greater efficiency or management. Large cuts ultimately meant a reduction in the [work] force (RIF). As a former Senate Ways and Means Committee chair, Cayetano knew the general fund budget for the most part was difficult to modify. Most general tax revenues were dedicated to fixed costs of operating the government—personnel expenses and fringe benefits.
The strong civil service system in place, buttressed by a State constitutional right to collective bargaining for public workers, also placed structural barriers to simply downsizing public employment. Under the system, laying off a worker allowed a more senior worker to take the job of a junior worker in a similar job—to “bump” from the position that other worker—while still retaining the higher pay. If the junior worker also had “bumping rights” the RIF process would also apply for that person as well. A State RIF, then, would take some time to implement and the actual savings could not be calculated until all bumping was completed.
But Cayetano instructed Budget Director Anzai and Deputy Director Miyahira not to apply budget cuts and restrictions across the board. Instead, Cayetano specifically ordered them to limit the cuts to the Department of Education (DOE) and the University of Hawai‘i (UH). As a result, the smaller Departments like the Department of Agriculture (DOA) and the Department of Land and Natural Resources (DLNR)—two agencies with less than one percent of the State’s then-General Fund Operating Budget—faced double digit cuts.
But even Cayetano’s instructions could not spare the DOE and UH, with the bulk of the spending from general tax collections, from millions of dollars in proposed reductions. As Anzai notes, the single largest component of State spending was on education.
Anzai and the others on the financial team were surprised but not very shocked by the strong reaction from the University community. They thought the faculty should have understood the fiscal crisis facing the State. But all the public unions, observing the growth in the economy that followed Statehood through the end of the Burns Administration, most of the Ariyoshi years, and in the confident Waihe‘e tenure, remained rightly focused on negotiating additional pay raises and improved benefits.
The instructions to the Cabinet were to make recommendations on how to implement the cuts within their respective departments. But the department heads were not specifically required to take into account the impact of “bumping rights.” As a result, additional detailed instructions were issued out of the Fifth Floor through Anzai’s offices. As experienced at the agencies, the money problems elevated the already large influence of the Budget and Finance leadership as Executive Memoranda on budget execution—hiring and program spending—encroached on management at the department level. If government was perceived as slow moving, the approvals now required to spend slowed it down further.
Nevertheless, certain department heads and their managers saw the budget cuts as an opportunity to re-cast their agencies.
Land Board Chair Mike Wilson looked to shift the agency’s natural resource focus from its economic development and asset management components towards a notion he called “sustainability.” The Land Management Division and a new Engineering Division absorbed components of the land and well development program, and conservation district planning office. The changes also spurred reassessment of the leasing and concession programs for public lands and boating facilities—whether fair market rentals should be required on all leases, regardless of historical and other concerns.
Department of Commerce and Consumer Affairs Director Kathryn Matayoshi accelerated her agency’s modernization efforts, including weaning its operations off any General Fund subsidies. She would push her managers to put more services online and to improve the efficiency of processing regulatory licensing with technological investments. Working with the Legislature, Matayoshi successfully created the Compliance Resolution Fund which collected and dedicated all fees charged by DCCA for the department’s operations.
Cayetano was also persuaded that some measure of civil service reform would need to be pursued as well as reducing public employee benefits. When the proposals received less than warm receptions from public workers, especially from the “ivory towers” of Mānoa, the irritated Governor had less than flattering assessments of the faculty’s work ethic. In his second term, the labor changes led to a statewide teachers strike supported by the university’s faculty union.
Attorney Lance Collins recounts Cayetano still refers to him as “that student activist” after all these years. But Collins, in retrospect, believes Cayetano “was the first Governor who didn’t just give the University administration or faculty a pass with its funding requests.” In Collins’ mind, Cayetano’s approach required the university and its constituencies to “more carefully and honestly justify its use of taxpayer money.” But while the university administration received more responsibility (and long-sought autonomy in spending), like other agencies tasked by the Governor with managing large budget cuts, Collins thinks UH’s leadership “floundered in many respects.” The administration proposed tuition increases and more emphasis on student loans. At the time, Hawai‘i students enjoyed some of the lowest tuition rates in the country.
Student leaders, Collins recalls, swiftly organized statewide protests against the tuition increases. And they blamed Cayetano. “Some of that was probably deserved but Cayetano became the scapegoat for what was really a complex set of decisions by University administrators, the legislators and the Governor in reworking the University’s relationship to the state treasury,” Collins explains.
Collins points out that the University prioritized “flashy academic units” over ones with broad-based community impacts. He describes the School of Medicine cannibalizing the School of Public Health.
A Cayetano supporter recalls another example of how the university proposed to implement the budget restrictions. At a hastily called assembly of parents to discuss proposed closure of the University of Hawai‘i Laboratory School, a school official roundly lambasted budget director Earl Anzai. Possibly violating student privacy laws, that same official off-handedly mentioned that the Ka‘a‘awa native had been kicked out of the Lab School; that person intimated that the cut was payback.
While Collins recognizes the timing of Cayetano’s tenure with the economic downturn of the 1990s (the end of the overseas investment bubble), he remains critical that the cuts to the university budget ultimately went into funding creation of the Hawai‘i Tourism Authority instead. But part-Filipino Collins also concludes, “For the Filipino community, in my view, his position as a two-term governor helped soften the otherwise harsh unconscious and/or conscious racism held by many people about the abilities of Filipinos in Hawai‘i.”
Gilbert S.C. Keith-Agaran served in the Cayetano Administration from 1995–2002. He presently represents Central Maui in the State Senate and practices law with Takitani Agaran Jorgensen & Wildman, LLLP.