How OHA manages its trust money seems perplexing to a lot of people. I will attempt to explain it as simply as possible. First, there is no greater kuleana or responsibility for an OHA trustee in the exercise of our fiduciary duty than to properly manage the Native Hawaiian Trust Fund. That is, to manage the funds in a way that both preserves the ongoing fiscal integrity of the fund while at the same time expending a percentage of the funds to promulgate services and programs that “better the conditions of Hawaiians and native Hawaiians.” I translate “better the conditions … ” to mean improving the quality of life for Hawaiians and empowering Hawaiians and our communities to become self-sufficient and weaned away from any dependency on government.
There are about 250,000 Hawaiian beneficiaries in Hawai‘i (another 250,000 outside Hawai‘i). This is a staggering mission that raises the bar way beyond the normal money management duties of an investment manager whose objectives are generally simply to manage money so that there are more profits than losses. The measures of success for the Native Hawaiian Trust Fund move beyond the balance sheet and spill into health care, social programs, education, housing, employment, and every index used to measure quality of life. It’s far more than a simple profit and loss statement.
WHERE DOES THE MONEY COME FROM?
I will use fiscal year 2012 numbers to explain where the money comes from and how it is managed since it deals in hard and verifiable numbers. The Native Hawaiian Trust Fund, the basic source of revenue for OHA, in 2012, contained about $374 million in Wall Street investments. But by federal policy and general rules of trust management, OHA cannot spend more than 5 percent of this amount at any given time to insure that the trust will be preserved in perpetuity. So, for 2012, OHA drew $18.71 million from the trust to run statewide operations. However, OHA had other sources of revenue in 2012. We received $15.1 million in ceded land revenues from the state, which by law are owed annually to OHA. The state Legislature appropriated an additional $2.37 million for certain specific programs and services. OHA also received $1.28 million in federal funds for certain programs and services. Additionally, OHA won a legal settlement and acquired other income in the amount of $3.46 million. And finally, the Board of Trustees authorized a special reserves fund capped at $3 million. Combining all of the above gave OHA a 2012 Operating Budget of $43.91 million, according to June 2012 numbers.
WHERE DOES THE MONEY GO?
The money for 2012 was expended through nine spending categories as follows:
- Personnel salaries and fringe benefits – $12.33 million
- Program costs such as printing, advertising, bulk mail, conferences, seminars, and promotion – $3.83 million
- Contracted consultant services and legal fees – $8.17 million
- Grants to communities and others for programs, services, and scholarships – $8.38 million
- Travel expenditures including transportation and hotels – $591,800
- Equipment purchases, repair, and maintenance – $754,111
- Overhead related to facilities, insurance, office rent, parking, office supplies – $2.13 million
- Fiscal Reserve (emergency fund) – $3 million
- Special programs such as Native Hawaiian revolving loan fund, Ka Wai Ola newspaper, legal settlements, program sponsorships – $4.73 million
I’ve tried to keep this as simple as possible. E mālama pono (take good care).