Ka Wai Ola - Office of Hawaiian Affairs, Volume 25, Number 7, 1 July 2008 — Bracing for a rough financial ride [ARTICLE+ILLUSTRATION]

Bracing for a rough financial ride

I he signs are everywhere. _A_ Hundreds laid off at longtinie businesses like Aloha Airlines and Moloka'i Ranch. The rising cost of fuel, food and other coniinodities. Falling tourism nunibers. A weak dollar. Sluggish real estate sales. The unpredictability of the stock market. The downturn in the economy is gripping all sectors of the eommunity. And, the Office of Hawaiian Affairs is no exception. OHA is being asked to lend a helping hand even more now than in the past with beneficiaries and the coniniunity-at-large suffering and struggling to make ends meet in these troubled tinies.

But soon OHA will need to make some tough hnaneial decisions as the forecast indicates that OHA's investment portfolio will likely eonhnue to decline along with market conditions. What does that mean? The short answer: Belt-tight-ening. We are bracing for a rough ride. And if these predictions hold true, you may see vacant positions at OHA stay vacant for a lot longer. There may be fewer dollars for information, outreach and educational programs. Grants to coniniunity organizations could also shrink. It could also mean layoffs at OHA. Why are such drastic measures being talked about? OHA's spending power is diniinishing. Currently, the Board of Trustees

policy restricts annual spending to 5 percent of the investment portfolio. If the value of the portfolio continues to decline, so will the aniount of money OHA will be able to use for its operating budget. This is not an easy discussion, but we want to engage in kūkākūkā now so that no one in the coniniunity will be caught off guard should these measures be deemed necessary. Why not just increase the spending liiniī, others may ask? In short, the more you spend, the less you will have in your account. The spending policy helps to keep a solid corpus of trust funds into the future. Increasing the spending restriction could lead to a shrinking core long term, whieh we believe is not financially prudent. Our long-tenn fiscal outlook

is important to the strength of the trust. That's why we support the recent approval by the Trustees of seven new positions - four in the Land Management Hale and three in our Treasury Division - beginning with the 2008-2009 fiscal budget that begins this month. The Land Management Hale oversees OHA's real estate holdings including assessing the potential for these properties to generate revenue. Our Treasury Division handles OHA's financial and budgetary functions, watching over OHA's liniited pool of money. Some may ask why would OHA add more positions during a downswing in the economy, while it's also talking about possible budget adjustments? Won't these added positions bog down the budget into the future? On the contrary, these positions will assist OHA in being better prepared to meet our core mission of bettering the condi-

tions of Native Hawaiians well into the future. It will be a future in whieh OHA will strive for greater fiscal accountability with our Treasury Division finding innovative and efficient ways to keep track of trust funds through positions such as an investment and hnaneial analyst. It will be a future with a healthy, balanced real estate portfolio and an effective Land Management Hale ready to assist the Trustees in making sound decisions on land acquisitions, limited liahility companies and comniercially viable, revenue-generating properties. When the economy iniproves, we are hopeful that these budgetary decisions will mean a stronger, more fiscally sound Office of Hawaiian Affairs, ready to respond to the needs of the Native Hawaiian conununity. This 'Ōlelo No'eau sums up our goal: "A'ohe mālama, pau i ka 'iole" or "When one takes care of his goods, he will not suffer losses." S

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By Clyde Nāmu'ū Administratur