MAI KA LUNA HO'OKELE - FROM THE ADMINISTRATOR

Bracing for a rough financial ride

Clyde Nāmu'o, OHA Adminstrator

The signs are everywhere.

Hundreds laid off at longtime businesses like Aloha Airlines and Moloka'i Ranch.

The rising cost of fuel, food and other commodities.

Falling tourism numbers.

A weak dollar.

Sluggish real estate sales.

The unpredictability of the stock market.

The downturn in the economy is gripping all sectors of the community.

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 community-at-large suffering and struggling to make ends meet in these troubled times.

But soon OHA will need to make some tough financial decisions as the forecast indicates that OHA's investment portfolio will likely continue to decline along with market conditions.

What does that mean?

The short answer: Belt-tightening.

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 community organizations could also shrink.

It could also mean layoffs at OHA.

Why are such drastic measures being talked about?

OHA's spending power is diminishing.

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 amount 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 community will be caught off guard should these measures be deemed necessary.

Why not just increase the spending limit, 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, which we believe is not financially prudent.

Our long-term 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 limited 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 conditions of Native Hawaiians well into the future.

It will be a future in which 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 financial 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 liability companies and commercially viable, revenue-generating properties.

When the economy improves, 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 community.

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.”