State Sen. Donna Mercado Kim, chairwoman of the Ways and Means Committee, speaks with Republican Sens. Fred Hemmings and Sam Slom, seated, before the Senate convened yesterday. The Senate passed 25-0 a bill that proposes to cut the entire $3 million in general funds to OHA's budget for each of the next two fiscal years that end June 30, 2011. - Photo: Lisa Asato

Senate slashes
OHA funding

OHA staff, advocacy, services; Alu Like, Native Hawaiian
Legal Corp., Nā Pua No'eau programs could suffer

By Lisa Asato / Ka Wai Ola Loa

State senators yesterday unanimously approved slashing the entire $3 million in general funds to OHA for each of the next two years under a bill that now heads to conference committee, where House and Senate lawmakers will iron out their differences. The House had earlier approved a 20 percent cut to OHA's budget – a cut that OHA has supported in light of the budget deficit.

April 14's 25-0 vote on the Senate floor comes after the Senate Ways and Means Committee on April 7 approved the same measure by a vote of 11-0.

State Sen. Marcus Oshiro

The proposed $3 million cut would affect OHA personnel, advocacy and service programs, as well as programs through Alu Like Inc., Native Hawaiian Legal Corp., and Nā Pua No'eau, which together receive $1.9 million in funding from OHA to provide social services, legal services and educational enrichment, respectively.

"We would have to reduce our staff to about half and we're estimating that probably about half our current case load, about 800 people, would have to find other attorneys," said Mahealani Wendt, executive director of the Native Hawaiian Legal Corp., which receives about 90 percent of its funding from OHA.

Under the Senate version of the bill – HB 900 SD 1 – a peacemaking project that helps families avoid litigation by coming to agreements on land and other assets they share, would also end, said Wendt, adding that the 18-person corporation has already instituted salary reductions, with higher paid staff taking larger pay cuts. NHLC also recently lost a $200,000 federal grant and so would be doubly hit by the proposed cuts, she said.

NHLC provides representation and other legal services for Hawaiians, in a fee system that's "set up to make the services accessible to everybody," regarding land, public land trust, natural resources and traditional and customary practices, which comprises rights relating to access, water, hunting and fishing, and burial protection, Wendt said.

"It would be pretty devastating if the Senate version of the appropriations bill is the one that survives this session," she said.

Senate Ways and Means Committee Chairwoman Donna Mercado Kim said she recognized the importance of services and advocacy that OHA provides needs to continue. But she said that for the next two fiscal years that end June 30, 2011, OHA's operating budget and initiatives would have to be funded from trust funds. In testimony, OHA said the use of trust funds is limited to Hawaiians of 50 percent blood quantum, making general funds from the Legislature "critical as it allows OHA to provide support and assistance to Hawaiians in fulfillment" of Chapter 10 of state law, which states OHA's purpose as bettering the condition of all Hawaiians regardless of blood quantum.

Mercado Kim (D-Hālawa, Moanalua, Kamehameha Heights) also said OHA has options to make up the funding shortfall. "They have $15.1 million that we already give them (for use of the ceded lands). They have a $14 million reserve fund and they have the $2.4 million in settlement money (from a Hōkūli'a lawsuit), so they are better off than anybody in the state at this point in time in having monies to be able to maintain their trust funds and maintain their programs," she said.

OHA recognizes that all state agencies have to do their part as the state faces a budget deficit, and has cooperated with House and Senate committees "to arrive at a solution that is fair and equitable to both the state and OHA on behalf of our beneficiaries," said Richard Pezzulo, OHA's chief financial officer.

Nā Pua No'eau programs, including its two-week Summer Institute, shown here, may suffer under the Senate version of the bill. The program may only be able to serve less than half of the 2,000 students it serves each year, said Nā Pua No'eau Director David Sing. - Photo: Courtesy Nā Pua No'eau

"But as we have testified previously, we believe that even before this economic crisis hit, many Native Hawaiians were already at the bottom of several socioeconomic indicators and a downturn in the economy will mean that Native Hawaiians will be impacted more severely than other groups living in Hawai'i," he said. "When the state cuts funding and reduces services and programs aimed at assisting individuals in the low- to moderate-income range, including OHA beneficiaries, these beneficiaries or organizations serving beneficiaries often turn to OHA to make up this reduction in funding. The $3 million general-fund elimination being proposed in the current budget will make it even more difficult for OHA to meet that need in the community."

Pezzulo also said OHA's $14 million fiscal reserve fund is not a rainy day fund in the same sense as the state's rainy day fund. OHA's fiscal reserve fund – which is a part of the Native Hawaiian Trust Fund and not separate from it – is for "special situations calling for immediate action with a super-majority vote of the Board of Trustees." Tapping into the fiscal reserve fund in a time of decreasing stock-market performance should be kept at a minimum, he said. That's because it would further diminish the Native Hawaiian Trust Fund, the value of which determines OHA's spending limit. OHA can spend 5 percent of the fair-market value of the Native Hawaiian Trust Fund, so when the fund's value increases, so does the amount OHA can spend on programs, advocacy and other services.

Pezzulo also said the $15.1 million that OHA receives from the state each year is not money that the state "gives" to OHA. "It is part of the state's recognition of its legal obligation to pay OHA for past-due revenue for the pro rata portion of income and proceeds from ceded lands," he said.

House Finance Committee Chairman Marcus Oshiro said he didn't want to pass judgment on the Senate version of the bill "until I see the rationale or the reason for their recommendation."

Although no testimony is taken during conference committee, Oshiro said he expects to hear from OHA trustees and OHA Administrator Clyde Nāmu'o about the potential impact the Senate proposal would have. "Nothing is set in stone," said Oshiro (D-Wahiawā).

As for the House version of the bill – HB 900 HD 2 – Oshiro said he based the 20 percent cut to OHA's budget on the Board of Trustees' priorities per its strategic plan and to keep cuts "consistent with all other state departments," which are also facing 20 percent cuts. Some departments, like Education, Agriculture and the University of Hawai'i are facing cuts of up to 35 percent, he said.

As for Alu Like, the Senate’s budget proposal would mean job cuts and that more than 3,000 Hawaiians statewide would not receive information and referral services, financial literacy education, emergency funds or individual development account help. The funding it receives from OHA supports its “ability to remain the agency Hawaiians go to for information and referral to resources in the community,” it said, adding that it acts as a bridge between service providers. “The elimination of this funding would result in the elimination of this effective bridge resulting in Hawaiians being bounced between projects and agencies,” Alu Like said. Alu Like is on track to serve 3,632 Hawaiians so far this year and anticipates service needs to increase in the next two fiscal years.

At Nā Pua No'eau, director David Sing said his program for gifted and talented Native Hawaiians could weather the House's proposed 20 percent cut through decreasing activities. But he said the Senate's proposed cut "would affect staffing and a significant number of activities we could run throughout the year. It would probably take us down to less than half of the students we serve this year."

Studies done by Nā Pua No'eau show that students who go through the program do better than other Hawaiian students when it comes to staying in college and graduating, Sing said. More than 900 former Nā Pua No'eau participants attend school in the University of Hawai'i system, he said. The program serves about 2,000 students a year with seven offices on six islands.

"We're trying to pull out all the stops in trying to get all our students and our families to let their legislators know how important it is to get the funding so that our program can continue in all the offices and all the islands and all the programs we provide," he said.

He added, "It is important for the Legislature to understand that… the contributions to Hawaiians doing well should not only fall on OHA to (fund) programs like ours."