Ka Wai Ola - Office of Hawaiian Affairs, Volume 17, Number 3, 1 March 2000 — Kainaliu, Kona and fiscal prudence [ARTICLE+ILLUSTRATION]

Kainaliu, Kona and fiscal prudence

AS A CHILD, I was lucky to spend a summer with my aunt Anna Lee Sui Park at Kainahu, Kona. Little did I know then that Kainahu, in 1964, would shape my thinking at OHA, in 2000. In 1964 at KainaUu, my aunt' s house was dependent on water catchment for drinking as weU as otheruses. When it rained we were permitted to take long showers, play in the yard with the water and use running water to wash dishes. But that summer it didn't rain. And so, my aunt required us to take short showers, to tum off the faucet when soaping up and then tum on the water to rinse off quickly, and re-use soap water when washing dishes. So what about that lesson in KainaUu is applieahle to OHA and fiscal pmdence?

Upon my first election in 1990, the OHA portfoho was approximately $19 miUion. Withthe eompleUon of the first negotiation with the State of Hawai'i, its value increased to $150 miUion in 1994 and today the value is approximately $345 mUlion. With that dramatic growth, OHA has funded and continues to fund many requests for assistance. But the portfoUo, Uke my aunt's water tank at KainaUu, is not without its Umits. More than any other year since its beginning, OHA is experiencing budget constraints. For example, we at OHA have fiinded programs since the beginning that never exceeded the amount of money we took in from the State of Hawai'i, investment interest and dividends. That is to say, if OHA received $20 miUion

in "new money" for a particular year, the OHA tmstees were careful not to exceed that amount. Further, we put some of that amount away so the trust assets would continue to grow, making

more interest and dividend ineome for Hawanans. But the rain has stopped falling. As an example, for the last four years the State of Hawai'i has refused to pay OHA its share of landing fees paid by the airlines. That amount exceeds $28 milUon. f o whUe programs, mortgage l loans, home Unprovement ^funding, self-help monies and Jgrants have been made, OHA ^has experienced a 40 percent decrease in ineome ffom Ūie state. In other words, 40 percent of the rain has stopped falling. And so like my aunt in KainaUu, the time has arrived for us to make the necessary adjustments to address this chaUenge. One response might be, "not to worry, the money's coming." But that's like my aunt's permitting us to take long showers based on a beUef it would rain again someday. She would never have done that. It would have had to rain for many days before any re-adjust-

ment would have taken plaee. Like my aunt did, OHA trustees must reexamine their actions and properly make readjustments. For example, some of our loan programs are subsidized losses paid for by OHA. It's time to revisit those loan programs. Someof OHA's grants are funded whoUy by OHA. It's time to leverage OHA money with other funding sources. OHA's operations used to cost $12.5 milhon. Today's cost is $11.2miUiondoUars. Itmaybe time to do what other private companies do successfuUy - to consider "outsourcing" as a means to cut operational costs. Money, like rain, is a finite resource. It must be preserved so that it ean be used in perpetuity. As at Kainaliu where we adjusted when the rain stopped falling, so too must OHA make necessary adjustments in its fiscal spending policies. As with any fantily budget, we must not spend more than we make. ■ # .

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TRUSTEE MESSAGES

CHAlRPERSON'S MESSAGE