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OHA puts fiscal sustainability plans in motion

December Ka Wai Ola cover story by Francine Kananionapua Murray

As Hawaiians cared for and managed natural resources in the past, OHA plans to manage its financial resources for the future

Around the 15th century, the Hawaiian population was growing so quickly that ruling chiefs in their wisdom became concerned that certain resources were becoming scarce. The land was surveyed and the islands separated into sections like pieces of pie, each including mountain peaks and flat lands spreading out and down to the ocean reefs. Each division included fresh water and had borders, often natural boundaries like rivers, mountain ridges or grooves of trees. And each was marked with an ahu, an altar of rocks, topped by a wood carving of a pua‘a, a pig’s head, or at times an actual pig, as an offering to the chiefs, hence the name ahupua‘a to describe the land division mauka to makai.

In dividing the land this way, chiefs and their konohiki managed vast resources within their ahupua‘a, which provided all life’s essentials – wood from uka, the mountains for shelter and canoes, medicinal herbs from deep within forests, sweet potato, kalo, ‘ulu and more from kula, inland, along with fish and limu rich in vitamins from the from ke kai, the ocean.

Occasionally items were kapu, banned for a period of time to maintain the resource. If items were scarce in one ahupua‘a, residents could trade with a neighboring ahupua‘a for what they needed.

This model of land and resource management was very successful and the abundance of natural resources helped the population to thrive and grow for generations.

With this natural resource management model in mind, OHA is taking steps to improve its financial resource management by taking a thorough inventory of all its financial assets, income and expenses, and then working with financial management experts to develop policies and strategies that can be implemented to ensure resources are available to better the lives of Native Hawaiians for generations to come.

“We need to take care of the resources as a whole – the investment portfolio, the commercial properties, the legacy lands, the core operating budget, the grants, the sponsorships, the contracts, the procurement, the I Mana Ka Lāhui and the Ka Wai Ola,” said OHA CEO and Ka Pouhana Kamana‘opono Crabbe. “We need to have a full inventory of what our assets are because if we are expending more than we are taking in, we are not fiscally healthy. So, we will need to diversify and exercise fiscal discipline, which means we have to scale down and stay within our budget. In other words I can’t go out and eat $12 worth of food if I only have $8.”

OHA has an enormous task with its mandate to improve the lives of Native Hawaiians, which can mean many things to the many different sectors of the community, but it has limited resources to achieve this. “Prioritizing is sometimes like a juggling act,” explained Crabbe. “Between housing, homelessness, jobs, diabetes, obesity, acquiring land, fighting off law suits, which are unfunded liabilities that take resources from programs for beneficiaries, it can be a struggle deciding what to focus on first, second and third.”

There are fundamental things OHA must do to keep its doors open. Its consultants have helped take a very comprehensive look at the whole organization and then put it into a structured model that can project scenarios into the future, which will help OHA make more informed decisions.

“I would say this was a healthy exercise,” said Crabbe. “I see this as something that can unify OHA as a whole organization, where we are all on the same page. There is agreement now between the board and administration on what the priorities and goals are for the future.

The office is committed to ensuring services and programs are consistently available and delivered to our lāhui through fiscally responsible and sustainable spending.

Its implementation plan will include a financial structure that will establish fiscal objectives and result in increases to the value of OHA’s assets and endowments, improving capacity to deliver on its vision and mission, specific success indicators, progress reports and a code of ethics applicable to trustees, officers and employees.

There are plans to grow OHA’s investments and revenue, taking into consideration economic and market volatility, such as huge drops in a country’s gross national product (GNP). For example, in 10 years China’s GNP grew to 10 percent, but in the past two years it fell to 6 percent. If that were to happen in the United States there would be massive unemployment across the nation. There is also political volatility around the world that affects the value of the dollar, at times causing inflation. This means the same items will cost more, and with inflation expenses usually continue to rise.

Subject to external factors that it cannot control, rather than reacting, OHA plans to minimize unwarranted risks by being proactive, anticipating different scenarios, strengthening internal processes, finding additional earning possibilities and diversifying.

The board hopes to fully implement its new sustainability plan starting next fiscal year, in July 2017.

Most agencies don’t have a fiscal sustainability plan. But OHA is not a typical government agency, it wears two hats – often operating as a nonprofit serving its beneficiaries, but also as a quasi-state agency that has to abide by state procurement and other rules and regulations.

As a quasi-state agency, OHA differs from other state agencies like the Department of Health or Department of Land and Natural Resources, which receive revenue from taxes and funds their departments may generate. OHA gets some revenue from that but the majority of OHA’s funding is from the Native Hawaiian Trust Fund, which is why OHA feels compelled to manage the trust responsibly and in perpetuity so that it is sustainable for the Native Hawaiian community.

“It took a lot of work, really digging deep into OHA’s spending patterns, contracts, grants, investment reports, work plans and everything else, such as nation building, purchasing this building and the potential for us to grow, all in anticipation of our new direction of fiscal sustainability,” said Crabbe. “It’s been a complicated process, but this plan will elevate OHA into the next era.

“I believe fiscal sustainability is really about integrity, which means the decisions we make are prudent, using our money wisely and making it count on meaningful programs and projects for our beneficiaries, while perpetuating the trust. We always think about how to improve the conditions and well-being of our people and our communities. The best way for us to do that is to have a solid fiscal foundation.”


Read more stories on OHA and events and news on the Native Hawaiian community in the Dec. Ka Wai Ola.

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