Responsibility for expenditures by schools in Hawaii for such utilities as electricity, telephone, gas, water, and sewer is shifting from the Department of Education to schools. In shifting responsibility for processing telephone and electricity payments to local schools while retaining management functions, the department failed to develop clear objectives, ensure schools possess adequate resources, or maintain accurate expenditure records by location. Departmental responsibility for gas, water, and sewer costs failed to produce such management benefits as accountability, flexibility, and conservation. Control of funds by the department penalized schools saving energy funds, failed to ensure school accountability or promote clear conservation efforts and incentives, and left schools short-staffed. Poor formatting and cost miscoding made departmental expenditure reports incomplete and inaccurate, undermining budget requests to the legislature. Utility allocations were inadequate because workload increases were unfunded and project costs underestimated, though the department now appears to be improving projected electricity cost calculations. The department should review current decisions which shift costs to schools, establish clear objectives, standardize expenditure and encumbrance reports, ensure correct use of Object Codes, and present complete and accurate forecasts of electricity needs. Complete and accurate forecasts must include shortfall estimates, actual 12-month billing, projected rate increases, costs for new facilities and modifications, and miscellaneous growth factors such as new technology. (Contains a letter of response from the affected agency.) (TEJ)