Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Finance, to which was referred H.B. No. 1100 entitled:

begs leave to report as follows:

The purpose of this bill is to provide the necessary appropriations and authorizations for the operations of the Office of Hawaiian Affairs (OHA) for fiscal biennium 2001-2003.

Testimony in support of this measure was submitted by OHA, Alu Like, Inc., the Native Hawaiian Legal Corporation, and the Kauai Heritage Center of Hawaiian Culture & the Arts. Several individuals supported funding for the Na Pua No`eau (Center for Gifted and Talented Native Hawaiian Children) program. One individual opposed this bill.

Until the native Hawaiian right of self-determination is formerly recognized by the federal government, your Committee will support OHA and will oppose any further attempts by outside parties to limit native Hawaiian entitlement programs. It is in this spirit and with this intent that your Committee reviewed this budget.

Your Committee recognizes OHA's role and responsibilities in providing programs and services for its beneficiaries and appreciates the efforts of OHA's Board of Trustees (Board) in submitting a proposed biennium budget that recognizes the State's limited general fund resources.

OHA submitted only one additional funding request for a new database for native Hawaiians. As there is no existing universal or central database for native Hawaiians, your Committee included $100,000 for fiscal year 2001-2002 and $13,000 for fiscal year 2002-2003 to fund the Native Hawaiian Relational Database. This database will assist in establishing priorities for programs for the well-being of all native Hawaiians. The system will allow for the integration of fiscal, evaluative, programmatic, and demographic databases for planning and reporting purposes. With this budget adjustment, your Committee authorized general fund appropriations of $2,619,663 for fiscal year 2001-2002 and $2,532,663 for fiscal year 2002-2003 for OHA's operations.

Your Committee has heard concerns raised by members of the Hawaiian community regarding the reorganization and consolidation of eleven programs into four programs. Nevertheless, since this matter was approved by OHA's Interim Board on November 3, 2000, by a margin of seven to one, your Committee respects the wishes of the Board with regard to internal organizational matters. Accordingly, your Committee has reflected this reorganization of OHA's programs in this bill.

Your Committee understands that the Legislative Auditor's Audit of the Office of Hawaiian Affairs report will soon be released. Your Committee withholds its comments on matters raised in the report until OHA has had an opportunity to respond and the report is finalized.

However, your Committee has serious concerns with regard to OHA's budgeting of trust fund revenues. The current appropriation ceiling of $3,981,312 does not accurately reflect the Board's true spending plan. The financial statements for the period from July 1, 1999, to June 30, 2000, as contained in OHA's 2000 annual report, indicate that OHA expended $14,500,000 in trust funds. The fact that OHA's spending far exceeded the amounts reflected in documents submitted to the Legislature is cause for alarm.

OHA's December 2000 budget report provides details for only $4,200,000 for fiscal year 2001-2002 and $4,000,000 for fiscal year 2002-2003. In addition, considering that as of June 30, 2000, OHA's assets were valued at over $390,000,000, such low levels of expenditures do not appear to provide for all of the needed beneficiary services. For this reason, your Committee has added a proviso seeking a full accounting of actual and planned expenditures from the trust fund.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1100, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1100, H.D. 1.