Posts Tagged ‘OHA Budget’

The State’s obligation to all Hawaiians

Monday, June 15th, 2009

By: TRUSTEE ROWENA AKANA

Source: June 2009 Ka Wai Ola Column

Towards the end of this past legislative session, the OHA general funds budget was completely cut by the Senate Ways and Means (WAM) committee chair Senator Donna Mercado Kim.  While it is still possible that the funding will be at least partially restored (the legislative session will not be over at the time of this writing), I was disappointed to hear the reasons why the WAM Chair felt the cuts could be justified.

The WAM Chair argued that: (1) OHA has $300 million in its trust fund; (2) OHA has $15 million in its fiscal reserve fund; (3) OHA receives $15.1 million a year in ceded lands payments; and (4) OHA received $2.03 million for a legal settlement from the Hokulia case from the Native Hawaiian Legal Corporation (NHLC).  However, the WAM Chair did not take into consideration other circumstances such as:

  • OHA’s trust fund has lost almost $150 million, or 30% of its value, from its peak in late 2007.
  • OHA’s Spending Policy puts an annual cap of 5% on withdrawals from our trust fund, so there can be no further withdrawals.
  • OHA had already agreed to reduce its budget by 20%, like all other state agencies, at the legislature’s request.  Now they are proposing to cut 100% of our budget.  Where is the fairness in that?
  • The OHA Fiscal Reserve Fund is not a “rainy day” fund and is actually part of our trust fund.  It was never meant to be used to make-up budget shortfalls.
  • OHA’s matching funds for the Native Hawaiian Legal Corporation only entitles us to about half of the total $2.03 million the NHLC received for the Hokulia settlement.  Therefore, OHA will only receive about $1 million.

In addition, the $15.1 million ceded land payments that OHA receives annually are part of the state’s legal obligation to pay OHA for its 20% pro rata share of income from ceded lands.  The Attorney General has made it clear that the Hawaii Constitution makes OHA trustees, not the legislature, responsible for determining how the Native Hawaiians’ portion of ceded land revenues is spent.  The Attorney General has also stated that OHA’s share of ceded land revenues belongs to Hawaiians and is not “public money.”

The WAM Chair also ignores the fact that the OHA budget was designed more than 16-years ago by the Governor and the State Legislature to contain both general funds and trustee approved matching trust funds so that it can better the condition of all classifications of Hawaiians:  (1) those with at least 50% blood quantum under the Hawaiian Homes Commission Act of 1920 and (2) any descendants of the aboriginal peoples inhabiting the Hawaiian Islands in 1778.  This blending of funds was thought to be the most effective way to allow OHA to serve the entire Hawaiian population, estimated at the last census to be 400,000 nation-wide.  OHA will not be able to provide the same level of services to such a large population without the assistance of additional general funds from the state.

The WAM Chair needs to realize that OHA funds a wide range of programs relating to Education, Health, Human Services, Housing, and Economic Development, just to name a few.  For the sake of comparison, while OHA may have $300 million in its trust fund, Kamehameha Schools spend more than that in just one year — only on education!

OHA has also subsidized the loss of legislative funds to the Department of Hawaiian Homelands, which by law must be funded by the Governor’s budget.  Other state departments that have been funded by OHA include the state departments of Education and Health.

Finally, cutting the funding to Na Pua No’eau is simply cruel and would destroy a leader in Hawaiian culture-based education.  The WAM Chair needs to think about the 1,500 Hawaiian students, their families, 80 teachers that will be adversely affected.

The actions by the WAM Chair shows why OHA needs to constantly educate the legislature on Hawaiian history and culture and Hawaiian rights.  But it wasn’t always this way — There was time when legislators made it a point to be educated on Hawaiian issues and were all well aware of why OHA was created during the 1978 Constitutional Convention. 

It was very clear to the legislators and the governors who served from 1978 to 2000 that the legislative funds that OHA was to receive were to serve the Hawaiian population with less than 50% blood quantum.  This promise was made because the law, Chapter 10 of the Hawaii Revised Statues, made it clear that the ceded land revenues are to serve Hawaiians with a 50% blood quantum.  The law ended up creating two classifications of OHA beneficiaries, but funded only one of those beneficiaries.  This is why legislative funds have been sought since 1980.

It is clear that the across the board “slash & burn” of OHA’s budget by Senator Donna Mercado Kim is without conscious or careful thought regarding the special circumstances that governs the Office of Hawaiian Affairs.  If you are outraged by this action, please write to Senate President Colleen Hanabusa and your state senators and representatives.  Aloha Ke Akua.

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Posted in Government

OHA Budget: It’s time to bite the bullet

Sunday, February 15th, 2009

By: TRUSTEE ROWENA AKANA

Source: February 2009 Ka Wai Ola o OHA Column

`Ano`ai kakou…  On January 6th, OHA’s administration briefed the State House and Senate’s money committees about OHA’s budget and funding needs for fiscal years 2010 and 2011.  After listening to the questions that the legislators asked our administrator, I couldn’t help but feel like I’ve heard them all before.

Back in August of 2008, I wrote about my concerns regarding the health of OHA’s portfolio and our out-of-control spending.  At the time, our Native Hawaiian Trust Fund portfolio had lost 10% of its value (approximately $39 million) and national consumer and prognostic indicators were saying that investors should have at least 20% of their investments in cash that can be liquidated and moved quickly.  Unfortunately OHA had less than 10% or $25 million of its portfolio in cash at the time.

I also wrote that according to a June 2008 report from one of our money managers, global equity markets had fallen by more than 8%, with US and European equity markets returning -8.4% and -11.7% respectively.  As of July 9, 2008, the estimated preliminary return for their share of OHA’s portfolio in the month of June was –4.95% compared to benchmark performance of –4.48%. 

They also stated that the growth outlook for the US economy remains weak, as increased unemployment, a weak dollar, and further pressure on the financial markets contribute to expectations of higher inflation over the next year, with expectations beyond that more restrained.  In other words, we were warned.  Given all of the bad news, it was more important than ever to bring our spending under control. 

On October 16, 2008, right before the November election, the board approved a $40,682,161 budget for Fiscal Year 2010 and a $39, 675,268 budget for Fiscal Year 2011, with no reductions.  The board also supported an increase in spending all the way through 2012.    In other words, these realigned budgets are being approved using money that we have yet to receive and probably will not receive given that our spending policy is tied to our three-year return on investments.  Since that time, our Native Hawaiian Trust Fund has fallen from $430 million to $312 million.  It is very difficult to defend and justify a budget that has expanded by over $20 million over the past six years to the legislature or anyone else.

At present, our budget is approximately $41 million.  Add to that all of the recent budget realignments and commitments made well into the future and the budget will probably climb to well over $50 million a year.

It appears that the whole world is caught up or affected in some negative way by America’s recession.  Economists say this recession will probably last through 2010.  That said, I found it embarrassing to sit through OHA’s budget briefing to the state legislature and listen to Senators and Representatives ask why OHA had not made any cuts to its budget.

Here are some of the suggestions and questions asked of us:

  • Are you willing to cut salaries if necessary?
  • Will you be able to make the necessary reductions to your budget if needed?
  • Where are OHA’s priorities for spending?
  • How much of OHA’s budget is committed to housing and health?
  • What did the Administrator mean when he said that he had spent the last seven years cleaning up OHA programs?
  • How much was being spent on Kau Inoa registrations and OHA’s Washington D.C. office?

There were many more questions but I have not included them because of space limitations. 

In this New Year of 2009, I still have great hopes that our board will come together and do what is best for our beneficiaries despite the fact that we may all differ in our opinion as to what must be done and how.  This can only occur if ALL of us look at the reality of the situation that confronts us.  We cannot, in this economy, continue to spend the way we have in past years.  We must also convey this message to our beneficiaries.

When one of our money managers late last year cautioned us about the stock market volatility, they suggested that we should consider reducing our spending policy from 5% to 3% during these uncertain times, until things get better.  I think it’s obvious that the time has come for us to take the advice of the professionals that we hired and “bite the bullet.”

It is understandable that the legislature is critical of OHA’s lack of spending restraint.  They basically as much as told us that, if you haven’t made any sacrifices and we have, why should we give you any more money?  At least that was my impression of their message to us.  Criticism like, “You obviously have enough to get by” only makes us appear arrogant.

Neither the legislature nor anyone else should have to tell us that belt tightening is necessary.  This is the responsibility of our board.  It is important to note that OHA pointed out to the legislature that the $3 million that we receive from the state helps to serve the less than 50% Hawaiian beneficiaries that we are also mandated to serve.  Aloha Ke Akua.

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Posted in OHA

OHA’s spending is out-of-control

Tuesday, January 15th, 2008

By: TRUSTEE ROWENA AKANA

Source: January 2008 Ka Wai Ola o OHA Column

`Ano`ai kakou…  In the last 5 years, OHA’s total operating budget has doubled to $41,094,798 million (Fiscal Year 2008).  Since 2006, the $15.1 million OHA gets from the state for our share of the ceded land revenues goes directly into our operating budget instead of being invested in the Native Hawaiian Trust Fund.  With the crisis situation our people face regarding health, education and housing, the trustees felt that more resources need to be put to use now to help our beneficiaries.

Doubling our budget has meant that OHA has much more money to spend on grants to aid our beneficiaries.  However, the trustees have been irresponsible for continuing to approve grants that should be called into question.  For example, trustees approved a grant to support the state Department of Education (DOE).  On November 1, 2007, an $88,584 grant was approved to support Pauoa Elementary School’s program to improve literacy, critical thinking and comprehensive skills for grades K-5.  This may sound all well and good, but isn’t it the DOE’s kuleana to fund the program?  The same could be said of the $66,334 grant to the University of Hawaii at Hilo to support the expansion of their astronomy center.  Shouldn’t the state be funding this?  The state already receives 20% of the ceded land revenues for public schools and public educational institutions, as described in section 5(f) of the Admissions Act.  Shouldn’t that be enough of a contribution to education by our people?  Maybe what OHA should be doing is to consider a lawsuit against the DOE for not carrying out their responsibilities.  After all, there should be some accountability for all of the funds that they receive.  The state should not be taking another bite at our apple.  Our mission is clear – we are here to serve our beneficiaries. 

Even the federal government is coming to OHA for money.  The trustees recently approved a $100,000 grant to help the Kaloko-Honokohau National Historic Park restore its fishpond.  Shouldn’t the National Parks Service by paying for this?

Having more grant money has also attracted some slick nonprofits to come to OHA and suck our grant funds with a big straw.  These professional organizations know how to fill out forms quickly and have the staff workers needed to make application deadlines.  I believe they are preventing truly needy, but less technically savvy, Hawaiian organizations from receiving their fair share of assistance.  For example, OHA gave the nonprofit Partners in Development Foundation $100,000 on November 1, 2007 to assist homeless children and another $99,968 on December 6, 2007 to help foster families.  This nonprofit knows how to sell their programs.  For example, they stressed that they were the only nonprofit organization that specifically targets Native Hawaiian foster children.  How could the trustees possibly turn them down at the board table?

The blame for this rests partially with OHA’s administrative staff.  The trustees depend on our administrative staff to do the leg work to make sure that the nonprofits are truly worthy of our beneficiaries’ money, but they keep dropping the ball.  For example, I keep seeing the same organizations coming back to OHA for grant funding year after year, even though our grant policy is to fund programs that are self-sufficient and projects that are “one-shot” proposals.  Our grants are not supposed to be used to keep organizations going.

Our grants department has constantly promised to fix our grant policy, but nothing is ever done.  In the past, OHA required all nonprofits to provide matching funds from other organization.  OHA would then match other contributions dollar-for-dollar.  Now our administration is breaking its own rules by allowing “in-kind” matches with no dollar matches.  Nonprofits are now saying their own staff workers’ salaries are part of the matching funds.  For example, the Alaka’ina Foundation’s $58,067 grant and Street Beat, Inc.’s $100,000 grant were both approved with in-kind matches of their own workers’ salaries – they didn’t get any matching money from other organizations!

The biggest problem with our current grant policy is that we do not require that a follow-up evaluation be done of each grant we approve.  OHA should at least be evaluating the nonprofits who receive massive grants of over $100,000 to make sure our beneficiaries’ money was properly spent, especially for organizations that are repeat requestors.  How hard is it to follow-up with the nonprofits to make sure that the Hawaiians they said would be served were actually served?  Strict grant control rules should apply for all grantees.  At the very least, no grant should be approved that has (1) no real dollar matching fund amounts, (2) no sustainability, and (3) are repeat grant requesters, which obviously proves that they cannot sustain their programs.  Again, this problem rests with the trustees and not just the administrative staff.  As long as the trustees are comfortable with having no rules – none will be applied.  It is just another example of irresponsibility.

I have been assured by our administration that changes will be made and presented to the trustees before the next grant cycle (lets see).  I will continue to follow-up with them and keep you informed. 

On another note: Thank you for your positive responses regarding my December 2007 column.  However, I have received some negative responses from some of my colleagues, which I expected.  HAUOLI MAKA HIKI HOU!

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Posted in OHA

2005 OHA legislative package needs your support

Tuesday, February 15th, 2005

By: TRUSTEE ROWENA AKANA

Source: February 2005 Ka Wai Ola Article

`Ano`ai kakou…  The State Capitol is buzzing with activity so it must be that time of the year again.  Here are some important bills from our 2005 legislative package that really need your support at the legislature:

Ceded Land Revenues.  Ever since 2001, we’ve tried unsuccessfully to pass legislation that would reestablish the continued funding of OHA from ceded land revenues.

Act 304, which was passed by the legislature in 1990 to clarify and the State’s obligation to transfer ceded land revenues to OHA, was repealed by the Hawaii Supreme Court in the Office of Hawaiian Affairs vs. State of Hawaii (2001) case involving ceded land revenues derived from the Honolulu International Airport.  

We almost got the bill passed in 2003.  It passed unamended in the Senate but died in the House Finance committee after the committee changed the bill to leave out money from improvements to the land.  In other words, if someone was leasing ceded lands for a dollar, but they built a building on it and was making millions of dollars from it, all OHA would get is 20% of just one dollar (20 cents).  In the end, we were forced to oppose our own bill.

The Legislature must define, once and for all, the revenue stream from public trust lands that is to be given to OHA for the benefit of Hawaiians.  Only by this action will the State finally move towards fulfilling its constitutional obligation to our people.

Hawaiian Representation on State Boards and Commissions.  We have submitted individual bills that would ensure Hawaiian representation on the Board of Land and Natural Resources, the Land Use Commission, the public advisory body for the Coastal Zone Management Program, and the Commission on Water Resource Management by specifying that one member of each body shall be appointed from a list of nominees submitted by OHA. 

The board, commission, and advisory body mentioned above regularly make decisions impacting the rights of Hawaiians.  These decisions often have immediate and lasting impacts on matters relating to Hawaiian cultural, economic, social, religious, political and historical concerns, all of which State law recognizes as being attached to the use and management of Hawaii’s natural resources. 

Despite this recognition under State law, Hawaiians have had no more of a voice on these bodies than any other member of the general public.  Our bill addresses this deficiency in the State’s regulatory scheme with respect to issues involving Hawaii’s land and natural resources.

Kuleana Lands.  Commercial developments have led to sharp increases in taxes on real property, including Kuleana land, throughout the State.  These increases have adversely affected many Hawaiian families who live on kuleana lands because they are unable to pay for the taxes.  Hawaiian families living on kuleana land now face the loss of their land and legacy that took generations to establish and must confront the possibility of homelessness.

OHA’s Kuleana land bill proposes to end this injustice by exempting Kuleana lands from real property taxes if the land has been continuously occupied by the original titleholder.

OHA Budget.  The following organizations have received significant boosts in their proposed budgets:  (1) Na Pua Noeau has gone from $581,948 in fiscal year 2005 to $707,208 in fiscal year 2006 – an increase of $125,360; (2) The Native Hawaiian Legal Corporation’s budget has jumped from $776,603 in fiscal year 2005 to $1,184,604 for fiscal year 2006 – an increase of $408,001; (3) Alu Like, Inc.’s budget has increased from $596,000 in fiscal year 2005 to $730,000 for fiscal year 2006 – an increase of $134,000.

I encourage all of you to call or write your legislators and let them know where you stand on all of the issues near and dear to us.  Also, your personal testimony will be very much appreciated when our bills are up for consideration in legislative committee hearings.  I look forward to working with all of you during this session of the legislature.  Imua e Hawai’i nei…

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Posted in Government