Ka Wai Ola - Office of Hawaiian Affairs, Volume 30, Number 5, 1 May 2013 — Managing the money of OHA's beneficiaries [ARTICLE+ILLUSTRATION]

Managing the money of OHA's beneficiaries

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 for an OHA tmstee in the exercise of our fiduciary duty than to properly manage the Native Hawaiian Tmst 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 expend-

ing 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 heeome self-sufficient and weaned away from any dependency on government. There are more than 200,000 Hawaiian beneficiaries. 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 Tmst fund moves beyond the halanee sheet and spills into heahh 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 mles 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, whieh by law are owed annually to OHA. The state Legislature appropriated an addi-

tional $2.37 million for certain specific programs and services. OHA also received $1.28 million in federal funds also for certain programs and services. Additionally, OHA won a legal settlement and acquired other ineome in the amount of $3.46 million. And finally, the Board of Trustees authorized a speeial 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 num-

bers. 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 - $754,1 1 1 • Overhead related to facilities, insuranee, 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, legal settlements, program sponsorships - $4.73 million. I've tried to keep this as simple as possible. We are posting these numbers in three pie charts with notations for your easy reference on my website, peterapo. eom. Click on Leading Hawaiian Organizations/Office of Hawaiian Affairs. E mālama pono. ■ What is your mana'o about OHA money? Visit my website to leave a comment, peterapo.com.

PetEr Apo TrustEE, O'ahu