Boyd v. Hawaii State Ethics Commission.

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Electronically Filed
Supreme Court
SCWC-14-0000352
19-JUL-2016
08:38 AM

IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

---o0o---

WILLIAM ERIC BOYD,
Petitioner/Appellant/Appellee/Cross-Appellant,

vs.

HAWAII STATE ETHICS COMMISSION, STATE OF HAWAIʻI,
Respondent/Appellee/Appellant/Cross-Appellee.

SCWC-14-0000352

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-14-0000352; CIV. NO. 13-1-115)

JULY 19, 2016.

RECKTENWALD, C.J., McKENNA, POLLACK, AND WILSON, JJ., AND
CIRCUIT COURT JUDGE CHANG, IN PLACE OF NAKAYAMA, J., RECUSED

OPINION OF THE COURT BY POLLACK, J.

This case addresses whether the Hawaiʻi State Ethics

Commission (Commission) had authority to adjudicate proceedings

against a charter school employee for conduct that occurred in

2006 and 2007 involving alleged conflict of interest violations

of the code of ethics contained in Chapter 84 of the Hawaiʻi
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Revised Statutes (HRS). We conclude that HRS § 84-14 (1993),

prescribing a code of conduct related to conflicts of interests

for State employees, and HRS Chapter 302B (Supp. 2006 & 2007)

(repealed 2012), encompassing comprehensive provisions that

provided for charter schools to establish conflict of interest

policies and procedures, resulted in conflicting statutory

regimes for charter school employees as to standards of conduct

involving conflicts of interests. In light of the inconsistency

between these State laws, we hold that, in accordance with

HRS § 302B-9(a) (Supp. 2006 & 2007) (repealed 2012), charter

school employees were exempt from HRS § 84-14 at the relevant

time period in this case. Accordingly, the Commission did not

have the authority to adjudicate proceedings against William

Boyd, a charter school employee, for alleged violations of

HRS § 84-14 that occurred in 2006 and 2007. We therefore vacate

the judgments of the Intermediate Court of Appeals (ICA) and the

Circuit Court of the Third Circuit (circuit court) and the order

of the Commission that sustained the violations against Boyd,

and we remand the case to the Commission with instructions to

dismiss the case.

I. BACKGROUND

At the time of the alleged ethics violations in this

case, Connections New Century Public Charter School

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(Connections) was governed by HRS Chapter 302B, which set forth

comprehensive legislation authorizing flexibility and

independent authority to charter schools in implementing

alternative frameworks with respect to personnel management and

the day-to-day functioning of a charter school.1 See HRS § 302B-

1 (Supp. 2006 & 2007) (repealed 2012). Charter schools, such as

Connections, operated independently and separately from public

schools under Chapter 302B but were linked to the State

Department of Education and Board of Education primarily for

administrative purposes. See, e.g., HRS § 302B-8 (Supp. 2006 &

2007) (repealed 2012) (stating the charter school administrative

office shall be attached to the Department of Education “for

administrative purposes only”); HRS § 302B-15 (Supp. 2006 &

2007) (repealed 2012) (setting forth the responsibilities of the

Department of Education with respect to charter schools and

special education services at charter schools).

Connections’ Local School Board, comprised mainly of

community representatives, served as Connections’ centralized

governing authority responsible for the administration of the

school. See HRS § 302B-7(a), (c) (Supp. 2006 & 2007) (repealed

2012). The Local School Board was in charge of financial
1
HRS Chapter 302B was repealed in 2012 and replaced with HRS
Chapter 302D.

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oversight and decision-making regarding State general funds and

federal funds allocated to the school as well as the hiring and

firing of charter school employees. See id. According to

Connections’ Principal John Thatcher, the Local School Board

essentially directed him as to how he should manage the school.

A. Connections’ Internal Policies and Procedures

During the pertinent time period in this case,

Connections, with the assistance of its hired auditors,

developed and followed its own internal checks-and-balances

procedures with respect to procuring school supplies, materials,

and other equipment. The purchasing procedure incorporated the

use of a purchase order form that Connections’ administrators

had developed. The purchase order form required the following

information: (1) the name and title of the individual making the

request (requestor); (2) the name, address, and telephone number

of the individual or entity from whom the materials could be

purchased (vendor); (3) the school materials desired, including

the quantity and pricing; and (4) the name(s) and title(s) of

the individual(s) approving the request.

Any employee of Connections could make a request by

listing the vendor’s information on the purchasing form and then

submitting the form to an authorized school official for

approval. The approval process included reviewing the

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information on the form, checking the school’s inventory to

ensure that the school did not have the requested materials, and

checking with vendors to find the best prices for the requested

materials. Principal Thatcher was required to approve all

purchase requests. When Principal Thatcher was not available to

give his approval, William Boyd or Sandra Kelley, as

administrative officials at Connections, were authorized to

preliminarily approve purchase orders in order to enable

expedited purchases, but all preliminary approvals were subject

to final approval by Principal Thatcher. If the purchase

involved Title 1 funds, the purchase also required review and

approval by the Title 1 Coordinator.2 Additionally, Principal

Thatcher explained that the Local School Board, through its

finance committee, could review his final approval of the

purchase order requests.

As an employee of Connections, Boyd was also

authorized to submit purchase order requests. On several

occasions during the 2006-2007 school year, Boyd prepared,

signed as requestor, or preliminarily approved various purchase

order forms for requested school materials. With respect to a

2
“Title 1 funds” refer to “federal monies provided to schools with
a high level of poverty, and such funds may be used to supplement the
school’s instructional program.”

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handful of forms, Boyd listed his wife, Erika Boyd (Mrs. Boyd),

as the requestor and/or the vendor. On two of the forms,

Principal Thatcher approved the purchase order by signing his

name under the heading “Approved.” On all the other forms, Boyd

preliminarily approved the request, usually at the direction of

Principal Thatcher, and then Principal Thatcher later reviewed

and authorized the order by initialing the form. For some of

the purchase order forms in which Mrs. Boyd was listed as the

vendor, a Connections’ teacher was the requestor, and Boyd

preliminarily approved the order. The school materials listed

on the forms at issue were sold to Connections through Mrs. Boyd

and fulfilled by an Amway distributorship co-owned by Boyd and

his wife (Amway Business).3

When asked whether it was a concern that Mrs. Boyd was

a requestor and Boyd was preliminarily signing off on purchase

order forms, Principal Thatcher explained that this situation

was quite rare and that it would have been a concern if it had

been a common practice. Principal Thatcher stated that the

original charter school statute required that the Board of

Education audit Connections every year, which it failed to do.

Thus, beginning in 2006, Connections hired its own auditors, who
3
Mrs. Boyd used any accumulated points or bonus checks that the
Amway Business earned to purchase school supplies for Connections.

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conducted audits and made recommendations to refine the school’s

checks-and-balances procedures, including the school’s purchase

order procedures.

Principal Thatcher explained that he sought to instill

in Connections’ employees that the school needed to get

everything at the lowest cost possible. He related that Boyd

did a lot of research on the availability of items and vendors

and stated that Boyd was very diligent about following the

practice of purchasing necessary items at the lowest price

possible. Boyd in large part secured his position as

Administrative Assistant at Connections because he always

followed Principal Thatcher’s directions and methods. Principal

Thatcher insisted that he could have approved the purchases of

the school materials from other vendors, rather than from Mrs.

Boyd, and that it was his prerogative to make that decision if

the prices had been cheaper.

In 2007, before the start of the school semester,

Connections learned of a sudden price increase for its high

school lunch services, and it had approximately three weeks to

enter into a temporary replacement food services contract.

Connections sought vendors, but Principal Thatcher explained

that it was difficult to find affordable vendors on short

notice. Consequently, Connections contracted with Boyd

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Enterprises, a sole proprietorship co-owned by Boyd and his

wife, to provide school lunches as Mrs. Boyd had the only

competing bid with the Department of Education that would save

Connections money.4

As part of the procedure for obtaining payment for the

school lunches, Boyd Enterprises was required to submit a duly

signed and certified Food Service Certificate, or invoice,

reflecting the number of school lunches provided and the total

amount owed. Principal Thatcher approved payment for the Food

Service Certificates, and in his absence, Kelley would do so.

Boyd apparently did not have authority to approve the Food

Service Certificates and did not participate in the approval

procedures as a school official.

From January 25, 2007 to June 21, 2007, Boyd, as the

Food Services Manager for Boyd Enterprises, submitted eleven

Food Service Certificates to Connections and certified that the

number of school lunches stated on the certificates represented

the actual number of lunches provided. Kelley signed all the

Food Service Certificates, and Principal Thatcher approved each

of the payments to Boyd Enterprises. Principal Thatcher

indicated that, at the time Connections had contracted with Mrs.
4
The high school lunches provided by Boyd Enterprises were sold
for $3.00 each.

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Boyd, it was not a concern that Connections was paying Boyd

Enterprises in which Boyd was the Food Services Manager. He

explained that “we did not see it as a problem” but, after a

year or so, in 2008, the hired “auditors advised [Connections]

that it would be better if [Boyd] was not involved with the food

service program at all, and [Connections] followed the advice of

the auditors.”

B. Commission Proceedings

On October 20, 2010, the Commission formally issued a

charge against Boyd based on twenty-six counts of violating

HRS § 84-14(a) and (d) (1993), involving the purchase of school

supplies and lunch services that had occurred approximately

three years earlier. Boyd filed an answer to the Commission’s

charge and requested a formal, contested, open hearing. Nearly

seventeen months later, on April 18, 2012, the Commission issued

its further statement of alleged violation that charged Boyd

with nine counts of violating HRS § 84-14(a),5 for requesting and

approving the purchase of school materials from Amway Business,

5
HRS § 84-14(a) provides, in relevant part, “No employee shall
take any official action directly affecting: (1) A business or other
undertaking in which the employee has a substantial financial interest; or
(2) A private undertaking in which the employee is engaged as legal
counselor, advisor, consultant, representative, or other agency capacity.”

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and eleven counts of violating HRS § 84-14(d),6 for assisting

Boyd Enterprises in transactions to provide lunches to

Connections.

Boyd filed an answer to the charge and further

statement of alleged violation. He also filed a motion to

dismiss based on the Commission’s lack of jurisdiction,

maintaining that he was not an employee of the State subject to

the code of ethics contained in HRS Chapter 84.7 Boyd

additionally contended that he was exempt from Chapter 84

because the legislature intended that local school boards

develop and adopt their own ethics code. Boyd argued that he

was accountable for his actions to Connections’ Local School

6
HRS § 84-14(d) states in pertinent part:

No legislator or employee shall assist any person or
business or act in a representative capacity for a fee or
other compensation to secure passage of a bill or to obtain
a contract, claim, or other transaction or proposal in
which the legislator or employee has participated or will
participate as a legislator or employee, nor shall the
legislator or employee assist any person or business or act
in a representative capacity for a fee or other
compensation on such bill, contract, claim, or other
transaction or proposal before the legislature or agency of
which the legislator or employee is an employee or
legislator.

HRS § 84-14(d).
7
Attached to Boyd’s motion to dismiss were the following documents
in which Connections was identified as Boyd’s employer: (1) U.S. Department
of Justice Immigration and Naturalization Service Employment Eligibility
Verification Form; (2) Internal Revenue Service Form W-4 (Employee’s
Withholding Allowance Certificate); and (3) State of Hawaiʻi Tax Form HW-4
(Employee’s Withholding Allowance and Status Certificate).

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Board, an autonomous entity under Chapter 302B, and not to the

Commission under Chapter 84.

Principal Thatcher submitted a signed, sworn

declaration to the Commission, which quoted the portion of

Connections’ Detailed Implementation Plan that stated as

follows:

The employment, appointment, promotion, transfer, demotion,
discharge, and job descriptions of all officers and
employees of or under the jurisdiction of the New Century
Charter School shall be determined by the New Century
Charter School and applicable personnel laws and collective
bargaining agreements.

Except as previously stated, the Board of Education or the
Superintendent of Education shall not have the power to
supervise or control the New Century Charter School in the
exercise of its functions, duties and powers.

This portion of the Detailed Implementation Plan described the

powers, duties, and responsibilities of Connections and its

Local School Board. Additionally, the Detailed Implementation

Plan indicated that the Director of Operations of the Local

School Board had direct authority over operations and business

services, fiscal management and personnel services, and

purchasing and audit services. The Commission in response to

the motion to dismiss filed a motion for determination that Boyd

was subject to the Commission’s jurisdiction. The Commission

deferred its decision as to whether Boyd was subject to its

jurisdiction until the date of the contested case hearing.

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At the beginning of the contested case hearing, the

Commission granted the motion for determination and denied

Boyd’s motion to dismiss due to lack of jurisdiction, orally

ruling that Boyd was an employee of the State subject to the

code of ethics contained in Chapter 84 and to the Commission’s

jurisdiction. During the hearing, in addition to the

circumstances recounted above, Boyd testified that he did not

receive any notification, training, or written information from

the Commission that the code of ethics applied to him. Boyd

also stated that he had done everything within his power to save

Connections money. No evidence was presented that Amway

Business or Boyd Enterprises overcharged Connections or that the

school materials and lunches supplied to Connections were not

provided at the best available price.

Following the hearing, the Commission rendered factual

findings, which included the following: (1) Connections was a

public charter school created pursuant to statute; (2)

Connections utilized a purchasing procedure that incorporated

the use of a purchase order form it had developed; (3) as part

of the purchasing procedure, several administrators were

required to review the request, and Principal Thatcher retained

final approval authority; and (4) Boyd, an Administrative

Assistant at Connections, initially approved several purchase

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orders, which were subject to final approval by Principal

Thatcher. The Commission also found that Principal Thatcher and

Kelley had the sole authority to approve payments for the Food

Service Certificates, which reflected the number of school

lunches provided, and that Principal Thatcher approved payments

to Boyd Enterprises for all the Food Service Certificates

submitted.

The Commission determined that the code of ethics

applied to all State employees, except judges and justices,8 and

that Connections was a State agency as defined in HRS § 84-3

(1993).9 The Commission thus concluded that, as an employee of

Connections, a State agency, Boyd was an “employee” as defined

in HRS § 84-3 and was therefore subject to the provisions set

8
HRS § 84-2 provides

This chapter shall apply to every nominated, appointed, or
elected officer, employee, and candidate to elected office
of the State and for election to the constitutional
convention, but excluding justices and judges; provided
that in the case of elected delegates and employees of the
constitutional convention, this chapter shall apply only to
the enforcement and administration of the code of ethics
adopted by the constitutional convention.

HRS § 84-2 (1993).
9
HRS § 84-3 defines “State agency” as including “the State, the
legislature and its committees, all executive departments, boards,
commissions, committees, bureaus, offices, the University of Hawaiʻi, and all
independent commissions and other establishments of the state government but
excluding the courts.”

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forth in Chapter 84.10 Consequently, in its February 8, 2013

“Findings of Fact, Conclusions of Law, and Decision and Order”

(Decision and Order), the Commission concluded that Boyd had

committed nine violations of HRS § 84-14(a) (Counts 1-9) and

eleven violations of HRS § 84-14(d) (Counts 10-20). The

Commission imposed an administrative fine of $500 for each

violation, the maximum amount for each violation, totaling a

fine of $10,000.

C. Appellate Proceedings

Boyd appealed the Commission’s Decision and Order to

the circuit court,11 contending, inter alia, that the Commission

lacked statutory jurisdiction over him because he was not a

State employee bound by the code of ethics in HRS Chapter 84 and

because the Local School Board was exempt from Chapter 84. Boyd

further maintained that the legislature intended that local

school boards develop, adopt, and enforce a separate ethics code

from Chapter 84, and therefore Boyd was accountable to

Connections’ Local School Board, not the Commission. Boyd

10
HRS § 84-3 defines “employee” as “any nominated, appointed, or
elected officer or employee of the State, including members of boards,
commissions, and committees, and employees under contract to the State or of
the constitutional convention, but excluding legislators, delegates to the
constitutional convention, justices and judges.”
11
The Honorable Greg K. Nakamura presided.

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argued that it would be absurd if Connections’ employees were

subject to two separate standards of ethical conduct.

In its “Decision and Order Affirming in Part and

Reversing in Part Hawaiʻi State Ethics Commission’s Findings of

Fact, Conclusions of Law, and Decision and Order” (circuit court

Order), the circuit court found that Boyd was a member of a

collective bargaining unit, as defined under HRS Chapter 89,

such that his employer was the State. Consequently, the circuit

court concluded that Boyd was an “employee” under HRS § 84-3 and

thus was subject to the code of ethics in Chapter 84. The

circuit court affirmed the Commission’s determination that Boyd

had violated HRS § 84-14(a) (Counts 1-9) but reversed the ruling

that Boyd had violated HRS § 84-14(d) (Counts 10-20) as the

Commission had failed to make a finding that Boyd received money

specifically in exchange for the act of signing the Food Service

Certificates on behalf of Boyd Enterprises. Accordingly, the

circuit court reduced the administrative fines to $4,500 and

entered Final Judgment.

The Commission appealed the circuit court Order and

Final Judgment, maintaining that the court erred in reversing

its ruling that Boyd had violated HRS § 84-14(d) because the

Commission had concluded that Boyd received compensation for

signing the Food Service Certificates. Boyd cross-appealed,

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contending, inter alia, that the Commission lacked statutory

jurisdiction over him because he was not a State employee but

rather was an employee of Connections’ Local School Board. Boyd

also argued that the Commission lacked authority over him

because during the time of the alleged offenses, charter school

employees were governed by HRS Chapter 302B. Boyd further

observed that, pursuant to HRS § 302B-7(d)12 and (e)13 (Supp. 2006

& 2007) (repealed 2012), Local School Boards were exempt from

HRS Chapter 103D (Procurement Code), Chapter 91 (Administrative

Procedures Act), and Chapter 92 (Public Meeting Law).

Additionally, Boyd suggested that a subsequent amendment to

HRS § 302B-7(f) indicated that Connections’ Local School Board

was exempt from HRS Chapter 84 and that the legislature intended

12
HRS § 302B-7(d) provided

Local school boards shall be exempt from chapter 103D, but
shall develop internal policies and procedures for the
procurement of goods, services, and construction,
consistent with the goals of public accountability and
public procurement practices. Charter schools are
encouraged to use the provisions of chapter 103D wherever
possible; provided that the use of one or more provisions
of chapter 103D shall not constitute a waiver of the
exemption from chapter 103D and shall not subject the
charter school to any other provision of chapter 103D.

HRS § 302B-7(d).
13
HRS § 302B-7(e) stated in relevant part that “[c]harter schools
and their local school boards shall be exempt from the requirements of
chapters 91 and 92.”

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that local school boards develop, adopt, and enforce a separate

ethics code.

The ICA, in a published opinion, ruled that the

Commission had jurisdiction to bring charges against Boyd

because he was a State employee and was not exempt from the code

of ethics by HRS Chapter 302B. The ICA concluded that Boyd was

an employee of the State required to adhere to the code of

ethics because (1) he admitted that he was an employee of the

Local School Board, which was an “arm of the State,” (2) he

participated in many of the available benefits of being a State

employee, and (3) he self-identified as a State employee on

several benefit enrollment forms. The ICA further ruled that

Boyd’s exemption argument was not supported by canons of

statutory construction, and thus was without merit, because the

“contrast between the procedural statutes and the Code of Ethics

leads to an inference that the latter was not intended to be

included within the list of exempted statutes.” Additionally,

the ICA concluded that the circuit court erred in reversing in

part the Commission’s Decision and Order as it pertained to

Boyd’s HRS § 84-14(d) violations because the record adequately

supported that Connections’ payments to Mrs. Boyd for the lunch

services constituted compensation to Boyd, for which Boyd was

culpable. Accordingly, the ICA affirmed in part and reversed in

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part the circuit court’s Order and remanded the case to the

circuit court to enter final judgment affirming the Commission’s

Decision and Order.

II. STANDARD OF REVIEW

Statutory interpretation is a question of law

reviewable de novo. Estate of Roxas v. Marcos, 121 Hawaiʻi 59,

66, 214 P.3d 598, 605 (2009) (quoting Capua v. Weyerhaeuser Co.,

117 Hawaiʻi 439, 443, 184 P.3d 191, 196 (2008)). Statutory

construction is guided by the following rules:

First, the fundamental starting point for statutory
interpretation is the language of the statute itself.
Second, where the statutory language is plain and
unambiguous, our sole duty is to give effect to its plain
and obvious meaning. Third, implicit in the task of
statutory construction is our foremost obligation to
ascertain and give effect to the intention of the
legislature, which is to be obtained primarily from the
language contained in the statute itself. Fourth, when
there is doubt, doubleness of meaning, or indistinctiveness
or uncertainty of an expression used in a statute, an
ambiguity exists. And fifth, in construing an ambiguous
statute, the meaning of the ambiguous words may be sought
by examining the context, with which the ambiguous words,
phrases, and sentences may be compared, in order to
ascertain their true meaning.

Id. (quoting Carlisle v. One (1) Boat, 119 Hawaiʻi 245, 256, 195

P.3d 1177, 1188 (2008)).

III. DISCUSSION

Boyd contends that, based on HRS § 302B-9 (Supp. 2006

& 2007) (repealed 2012),14 he was exempt from the code of ethics

14
HRS § 302B-9(a) provided in relevant part,

(continued. . .)
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in HRS Chapter 84. Boyd argues that because charter schools and

their local school boards had autonomy and responsibility over

the internal policies and procedures relating to personnel

management and use of public funds, it would have been

inconsistent and duplicative to have subjected charter schools

and their employees to Chapter 84. In essence, Boyd asserts

that because Chapter 84 was in conflict with HRS Chapter 302B,

Chapter 302B superseded Chapter 84, rendering Boyd exempt from

the code of ethics within that Chapter. Boyd also argues that

the subsequent 2011 amendment to HRS § 302B-7(f) reflects that

the legislature recognized an actual conflict between Chapter 84

and Chapter 302B and amended Chapter 302B in an attempt to

remove the conflict, which was consistent with the legislature’s

(. . .continued)

Charter schools shall be exempt from chapters 91 and 92 and
all other state laws in conflict with this chapter, except
those regarding:

(1) Collective bargaining under chapter 89 . . .

(2) Discriminatory practices under section 378-2;
and

(3) Health and safety requirements.

HRS § 302B-9(a).

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actions regarding other State laws conflicting with Chapter

302B.15

The Commission responds that because Boyd had a State

constitutional mandate to adhere to the code of ethics pursuant

to Article XIV of the Hawaiʻi Constitution,16 Boyd could not have

opted out of the code of ethics, and Connections’ Local School

Board could not have exempted him from his constitutionally

mandated ethical obligations.17 Additionally, the Commission

contends that Boyd was not statutorily exempt from the code of

ethics.18

15
In his application for writ of certiorari, Boyd also presents the
following questions: (1) whether ethics code violations require proof of
intent; (2) whether the ICA “overturned” Tangen v. State Ethics Commission,
57 Hawaiʻi 87, 550 P.2d 1275 (1976) without basis; and (3) whether the
Commission violated Boyd’s due process right to a timely hearing.

16
Article XIV of the Hawaiʻi Constitution provides that “the
legislature . . . shall adopt a code of ethics which shall apply to appointed
and elected officers and employees of the State or the political subdivision,
respectively, including members of the boards, commissions and other bodies.”
Haw. Const. art. XIV.
17
The Commission’s contention that Boyd could not have “opted out”
of compliance with the code of ethics because of Article XIV of the Hawaiʻi
Constitution is inapt. Boyd’s charges were based upon a purported violation
of the code of ethics from which Boyd contends that he had been statutorily
exempted.
18
The Commission further maintains that Boyd waived his argument
that he was exempt from Chapter 84 because he did not initially raise this
issue in his application for writ of certiorari. As stated, Boyd contended
both to the circuit court and the ICA that, as a charter school employee, he
was statutorily exempt from the code of ethics in Chapter 84. Additionally,
both parties addressed this issue in their supplemental briefs to this court,
and therefore the issue was adequately raised by Boyd to this court.

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We turn first to the code of ethics, adopted by the

legislature and codified in HRS Chapter 84. The Chapter sets

forth specific standards of conduct as to gifts, reporting of

gifts, confidential information, fair treatment, conflicts of

interests, contracts, requirements of disclosure, and post-

employment restrictions. See HRS §§ 84-11 to -18 (1993). An

ethics commission, established by Chapter 84, administers the

code of ethics and enforces the provisions prescribed in the

Chapter so as to promote public confidence in public servants.

See HRS Chapter 84, Preamble (1993). The conflict of interest

provision at issue in this case, prescribed in HRS § 84-14,

restricts a State employee from taking any official action

affecting a business in which the employee has a substantial

financial interest or is engaged in an official capacity.

HRS § 84-14(a) (1993).19 It also prohibits an employee from

representing or assisting a business for compensation on a

contract or transaction before the agency where the employee

works. See HRS § 84-14(d) (1993).20

The legislature enacted HRS Chapter 302B in 2006,

which governed the establishment and administration of charter

19
See supra note 5.
20
See supra note 6.

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schools, the powers and duties of local school boards, charter

schools’ exemptions from State laws, and certain charter school

employees’ rights and benefits. Under this comprehensive

legislation, which was later repealed in 2012 and replaced with

HRS Chapter 302D, charter schools were empowered with “the

flexibility and independent authority to implement alternative

frameworks with regard to . . . personnel management.”

HRS § 302B-1 (Supp. 2006 & 2007) (repealed 2012). A local

school board served as the autonomous, governing entity of the

charter school with “the independent authority to determine the

organization and management of the school . . . and compliance

with applicable federal and state laws.” Id.

The State legislature’s adoption of this comprehensive

legislation relating to the governance of charter schools in

HRS § 302B (Supp. 2006) (repealed 2012) indicated that charter

schools were neither standard public schools nor private

schools. See HRS § 302A (Supp. 2006) (relating to public

schools); HRS § 302C (Supp. 2006) (relating to private schools).

Rather, charter schools, while supported in part by State

general funds and linked to the Department of Education

primarily for administrative purposes, had discretion and

autonomy to operate independently and separately from the

Department of Education and Board of Education. See, e.g.,

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HRS §§ 302B-3, -8, -12, -15, -16 (Supp. 2006 & 2007) (repealed

2012).

For example, in order to establish a charter school, a

detailed implementation plan describing “[a] governance

structure for the charter school that incorporate[d] a conflict

of interest policy” was required to be submitted to the Board of

Education. See HRS §§ 302B-5(d)(6), -6(d)(6) (Supp. 2006 &

2007) (repealed 2012). The detailed implementation plan was

also required to contain a framework for assessing the

accountability of faculty and staff, both individually and

collectively, that was “at least equivalent to the average

system of accountability” in State public schools. HRS §§ 302B-

5(d)(1), -5(d)(5), -6(d)(1), -6(d)(5). A necessary component of

the implementation plan was to provide for program audits and

annual financial audits. HRS §§ 302B-5(d)(5)(A), -5(d)(5)(D),

-6(d)(5)(A), -6(d)(5)(D). This detailed implementation plan

served as the basis for a “performance contract” between the

Board of Education and the charter school and presented a plan

for holding the charter school accountable for its operations,

finances, and management. See HRS § 302B-1.21 Thus, under

21
A “detailed implementation plan” was defined as “the document
that details the charter school’s purpose, focus, operations, organization,
finances, and accountability, and becomes the basis for a performance
contract between the board and the charter school.” HRS § 302B-1.

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HRS §§ 302B-5(d) and 302B-6(d), charter schools and their local

school boards were required to establish a framework of

accountability that incorporated a conflict of interest policy

and provided for annual financial audits.

Once established as a charter school under Chapter

302B, a charter school was mandated to conduct a comprehensive

self-evaluation that was submitted to the charter school review

panel at the end of the school year. HRS § 302B-14(a) (Supp.

2006 & 2007) (repealed 2012).22 The self-evaluation process

required an evaluation of the school’s organizational viability,

which necessitated a showing that the charter school operates in

“accordance with office guidelines and procedures, is

financially sound and fiscally responsible in its use of public

funds, maintains accurate and comprehensive financial records,

operates in accordance with generally accepted accounting

practices, and maintains a sound financial plan.” HRS § 302B-1.

The autonomy and independence accorded to charter

schools was further reflected in HRS § 302B-9(a), which

specifically exempted charter schools from Chapter 91 and

22
HRS § 302B-14(a) provides, in relevant part, that “[e]very
charter school shall conduct annual self-evaluations that shall be submitted
to the board within sixty working days after the completion of the school
year. The self-evaluation process shall include but not be limited to: . . .
(6) [a]n evaluation of the school’s organizational viability.”

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Chapter 92, pertaining to the procedures of State agencies. See

HRS § 302B-9(a). HRS § 302B-9(b) also provided that charter

schools were exempt from the procurement code in HRS Chapter

103D but were mandated to develop their own internal policies

and procedures “consistent with the goals of public

accountability and public procurement practices.” HRS § 302B-

9(b). In addition to these exemptions from specific HRS

chapters, charter schools were exempt from all other State laws

in conflict with Chapter 302B. HRS § 302B-9(a).

Thus, HRS Chapter 302B set forth a statutory scheme

that empowered a charter school to delineate and implement a

framework of accountability that established internal conflict

of interest policies and procedures. In developing and

enforcing this framework of accountability, the applicable

statutory provisions permitted a charter school to hire its own

auditors to review the school’s policies and procedures and to

recommend improvements to personnel management and the use of

fiscal resources. With mandated yearly self-evaluations

required by Chapter 302B, a charter school was responsible for

assessing its administrative operations and financial

accountability. Thus, the legislature enacted a statutory

scheme in which charter schools were accorded discretion,

autonomy, and independence over matters relating to the required

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establishment of standards of conduct for charter school

employees. These standards of conduct included conflict of

interest standards.

Generally, a state law conflicts with another state

law where the statutory provisions are “explicitly contrary to,

or inconsistent with,” each other. See In re Haw. Gov’t Emps.

Ass’n, 116 Hawaiʻi 73, 102-03, 170 P.3d 324, 353-54 (2007).

Here, HRS § 84-14 prescribed standards of conduct as to

conflicts of interests that employees were required to adhere

to, whereas HRS §§ 302B-5(d)(6) and 302B-6(d)(6) required

charter schools to submit a detailed implementation plan

containing a conflict of interest policy and assessment plan

providing for faculty and staff accountability and annual

financial audits. HRS § 302B-14(a) further mandated that

charter schools conduct yearly self-evaluations in order to

ensure compliance with State and federal laws. Charter schools

were thus obligated to develop, implement, and revise their own

internal and independent conflict of interest policies and

procedures for charter school employees.

During the relevant time period, HRS Chapter 302B,

which was adopted in 2006 and later repealed in 2012, did not

require charter schools to adopt the specific standards of

conduct prescribed in HRS § 84-14. That is, the internal

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policies and procedures relating to conflicts of interests that

charter schools established and implemented could have been

identical, more expansive, or less restrictive than the conflict

of interest provision prescribed in HRS § 84-14. Additionally,

Chapter 302B required charter schools to review their policies

and procedures with respect to responsibility for the use of

public funds, which would include conflict of interest standards

per the requirements of the school’s detailed implementation

plan. Further, during the relevant time period, Chapter 302B

did not require that the internal policies and procedures of

charter schools relating to conflicts of interests be consistent

with the code of ethics.23

In contrast, HRS § 84-14 required that an individual

employee conform to specific statutory conflict of interest

standards. Concurrently, Chapter 302B provided that charter

schools develop and establish conflict of interest standards to

govern charter school employees. If both HRS § 84-14 and

23
Under the current statutory scheme governing charter schools,
charter school employees are expressly subject to the code of ethics and not
exempt from HRS § 84-14. In 2011, the legislature amended HRS Chapter 302B
to provide that “[c]harter schools and their local school boards shall
develop internal policies and procedures consistent with ethical standards of
conduct, pursuant to chapter 84.” HRS § 302B-7(f) (Supp. 2011) (repealed
2012). In 2012, the legislature repealed HRS Chapter 302B and enacted
Chapter 302D. Under HRS § 302D-12(i), “[a]ll charter school employees and
members of governing boards shall be subject to chapter 84.” HRS § 302D-
12(i) (Supp. 2012).

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Chapter 302B applied to a charter school employee during the

relevant time period, then that employee would have been subject

to two separate conflict of interest standards. Thus, that same

employee could have been subject to punishment under one set of

standards, but not the other, for the same conduct.24

Consequently, HRS § 84-14 was inconsistent with the

provisions of HRS §§ 302B-5(d)(6) and 302B-6(d)(6) as to

conflict of interest standards. Because HRS § 84-14 conflicted

with these subsections of Chapter 302B at the time of the

alleged violations, Boyd was exempt from HRS § 84-14, pursuant

24
Although unnecessary to our holding, the circumstances in this
case reflect the inconsistency resulting from the application of the relevant
statutory provisions. In 2006 and 2007, Connections, in accordance with the
requirements of its Detailed Implementation Plan, developed and implemented
conflict of interest policy and procedures, and it evaluated on a yearly
basis whether the school was financially sound and fiscally responsible in
its use of public funds. See HRS §§ 302B-1, -5(d)(6), -6(d)(6), -7(c), -
14(a). Connections’ administrative framework required documentation and
multiple levels of review by school officials for transactions involving the
use of school funds. These policies and procedures indicate that Connections
established an organizational structure designed to avoid financial
mismanagement, provide transparency, and maximize the effective use of school
funds.

Boyd followed Connections’ conflict of interest policy by
including the requisite information on the purchase order forms and Food
Service Certificates and by ensuring the proper documentation was submitted
to the appropriate school officials. All approvals were obtained prior to
purchasing the requested materials, which included reviewing whether the
school materials and lunches were obtained at the lowest possible price.
Yet, despite acting in accordance with Connections’ internal conflict of
interest policy and procedures, Boyd was charged and found in violation of
twenty counts of HRS § 84-14, the conflict of interest provision contained in
the code of ethics. He was fined $500 for each violation, totaling a fine of
$10,000. Boyd was thus subject to punishment under HRS § 84-14 for the same
conduct that was in compliance with Connections’ conflict of interest policy,
which was adopted in accordance with HRS §§ 302B-5(d)(6) or 302B-6(d)(6).

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to HRS § 302-9(a). Thus, we conclude that the Commission lacked

authority to adjudicate proceedings against Boyd for alleged

violations of HRS § 84-14 that occurred in 2006 and 2007.

Accordingly, the circuit court erred in its partial affirmance

of the Commission’s Decision and Order, and the ICA erred in

affirming in part and reversing in part the circuit court’s

Order and remanding the case to the circuit court to enter final

judgment affirming the Commission’s Decision and Order.

IV. CONCLUSION

For the reasons discussed, we vacate the ICA’s

Judgment on Appeal, the circuit court’s Order and Final

Judgment, and the Commission’s Decision and Order, and we remand

the case to the Commission with instructions to dismiss the

case.25

Ted H. S. Hong /s/ Mark E. Recktenwald
for petitioner
/s/ Sabrina S. McKenna
Kimberly Tsumoto Guidry /s/ Richard W. Pollack
For respondent
/s/ Michael D. Wilson
/s/ Gary W.B. Chang

25
Boyd also raised the question of whether charter school employees
are employees of the State. In light of our disposition, it is unnecessary
to resolve this question, and, accordingly, the ICA ruling as to this issue
is also vacated. Additionally, we do not reach other issues raised by Boyd.

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