Ka Wai Ola - Office of Hawaiian Affairs, Volume 31, Number 1, 1 Ianuali 2014 — Kamehameho Schools Report on Financial Activities [ARTICLE+ILLUSTRATION]

Kamehameho Schools Report on Financial Activities

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Kamehameha Schools' mission is to fulfill Pauahi's desire to create educational opportunifies in perpetuity to improve the capabiiity and well-being of people of Hawaiian ancestry.

For the fiscal year ending June 30, 2013, Kamehameha Schools expended $362 million in its campus- and community-based educational programs and services statewide, an increase of $23 million over the previous year. Kamehameha Schools' official trust spending rate is reported at $315 million, or 3.74 percent, for the fiscal year, and when factoring in an additional $46 million in debt for the completion of the Kapālama Master Plan and reserve activity during the period, the trust's effective spending rate, at $362 million, was 4.29 percent based on the five-year average value. Kamehameha Schools spent $168 million on campusbased programs and $110 million on community-focused programs over the fiscal year. Spending highlights include more than $15 million awarded in Pauahi Keiki Scholarships to 2,341 preschool students and $2.7 million awarded to 512 students through the Kipona (Pauahi Keiki Scholarships Kindergarten Scholarships) program. Additionally, more than $15 million in post-high scholarships was awarded to 2,148 students attending college. A total of $17.4 million was spent on collaboration efforts with more than 50 community organizations statewide. In addition, Kamehameha Schools provided $25.3 million in support of public school transformation in largely Hawaiian communities, including almost $6 million in per-pupil funding and support to 4,100 students in 17 Hawaiian-focused start-up and conversion public charter schools, $6.5 million for on-site literacy instruction by Kamehameha Schools' staff in 21 DOE schools (K-3 classrooms) statewide and $7.3 million in funding for a variety of programs for students in DOE schools, including tutoring, summer enrichment programs, homework centers, place-based learning, distance learning and the Kamehameha Scholars program. As of June 30, 2013, the overall fair market value of the Kamehameha Schools endowment was $10.1 billion. The Consolidated Balance Sheet at right shows total assets to be $7.7 billion; it records real estate at cost rather than fair market value, and includes non-endowment assets such as educational, agricultural and conservation assets. Fiscal year 2013 was the eighth year of the Kamehameha Schools 10-year Education Strategic Plan, adopted in 2005 and based on the Kamehameha Schools Strategic Plan 2000-2015. The number of children and families impacted by Kamehameha Schools' campus and community programs in fiscal year 2013 was 47,421 learners (including a total of 13,642 parents and caregivers in the prenatal to grade 12 community who received training to support their children. In direct service to Pauahi's mission of educating her beneficiaries, Kamehameha Schools saw the following results in educational achievement. Prenatal to 8 Years of Age Kamehameha Schools served 9,988 keiki ages 0-8 and their parents and caregivers through its 30 KS center-based preschools, preschool scholarships, literacy instruction and various educational collaborations. With Kamehameha Schools' investments in early education, 60 percent of Hawaiian children have enrolled in early learning programs versus the state average of 50 percent and reading rates have improved by 7 percent in DOE classrooms supported by Kamehameha Schools' literacy instructors.

Grades 4 Through Post-High Kamehameha Schools served 18,399 learners through its enrichment, campus outreach, collaborations, distance learning and summer school programs such as the Explorations Series, Kamehameha Scholars, 'Ike Pono and Career Post-High & Guidance Counseling. The Kamehameha Scholars program saw 100 percent of its 157 seniors receive college acceptance letters. A total of 2,126 non-campus learners were enrolled in campusbased summer programs. Campus Programs Kamehameha Schools educated 5,392 learners, including graduating 694 seniors, at campus programs on Hawai'i, on Maui and at Kapālama with 95 percent of seniors continuing their education at colleges and universities in Hawai'i and across the nahon. The goal, however, is not just to have students attend college, but to graduate. There are nationwide concerns about the low levels of college graduation rates, and Kamehameha Schools is monitoring how many of its college-bound graduates actually graduate from college within six years. In the past fiscal year, Kamehameha Schools' graduates averaged 59 percent in graduation from college, compared to a 56 percent nahonal rate of students who went to college. Although there may be extenuating circumstances such as economics or family situations whieh ean impact college graduation rates, Kamehameha Schools has set post-secondary success as an essential outcome for its beneficiaries and will thus target future efforts to improve college persistence. For more, including a copy of Kamehameha Schools audited "Consolidated Pinaneial Statements and Supplemental Schedules" for fiscal year 2013, please visit www.ksbe.edu/annualreports. KAMEHAMEHA SCHOOLS ENDOWMENT Kamehameha Schools' mission is fully supported by its enelowmenī. At fiscal year end, the endowment was valued at $10.1 hillion at June 30, 201 3. A globally, diversified financial assets portfolio of $6.6 billion, and Hawai'i commercial real estate representing $3.5 billion atfair market value.

CONSOLIDATED BALANCE SHEET JUNE 30, 2013 (in thousands) ASSETS Current assets Cash and cash equivalents $ 44,326 Receivables, net 5,299 Other 3,825 Total Current assets 53,450 Trust investments Financial lnvestments 6,502,616 Amounts receivable for securities sold 33,948 lnterest receivables 13,460 Real estate investments, net 269,695 Real estate held for development and sale 16,603 6,836,322 Other investments 37,999 Property and equipment, net 687,823 Deferred charges and other 111,170 TOTAL ASSETS $ 7,726,764 LIABILITIES AND NET ASSETS Current liabilities Accounts payable and accrued expenses $ 51 ,481 Current portion of notes payable 20,783 Deferred ineome and other 23,783 Total Current liabilities 96,047 Notes payable 254,550 Accrued pension liability 71,122 Accrued postretirement benefits 39,265 Amounts payable for securities purchased 20,460 Other long-term liabilities 23,443 Total liabilities 504,887 Commitments and contingencies Net assets - unrestricted 7,221,877 TOTAL LIABILITIES AND NET ASSETS $ 7,726,764

KAMEHAMEHA SCHOOLS®

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KAMEHAMEHA SCHOOLS LANDS Commercially zoned lands make up 1 percent of total acreage (363,603 acres) belonging to Kamehameha Schools. Agricultural and conservation lands comprise 99 percent and are primarily considered sustainability assets, not included in the endowment fund. During the fiscal year 201 3, Kamehameha Schools spent $12 million (net of agricultural rents) to steward agricultural and conservation lands and natural resources.