Trust sets record on
Despite losing money, Kamehameha
McCubbin cites threats
Schools still spends $144.2 million
Kamehameha Schools spent a record $144.2 million on educational programs in its last fiscal year, according to records filed with the Internal Revenue Service.
The money was spent on its preschool to grade 12 students and to reach thousands more Hawaiian children in off-campus educational programs or financial aid.
"The emphasis and focus of the trust has been extending the legacy to more Hawaii children, and I think the financial activity of the trust reflects that," Kamehameha spokesman Kekoa Paulsen said yesterday about the increase in educational spending.
At the same time, Kamehameha, like many companies and institutions over the past two fiscal years, was hit hard in the stock market and on other investments. Unlike the previous two years, last year's losses were not offset by the whopping windfall the trust received from selling its stake in the New York investment firm of Goldman Sachs LLP after it went public.
For the year ending June 30, 2002, the trust listed a loss of $93 million for one group of investments compared to a gain of $548 million the year before when it benefited from selling shares in Goldman Sacks.
The trust, which has $4 billion in assets, had revenues of $174 million in fiscal 2002 compared with revenues of $303.5 million the year earlier when the trust spent $138.7 million on educational programs.
What the trust spends on educational programs is budgeted a year or more ahead of time so it is not directly tied to the revenues earned in the year the money is spent.
In fiscal 2002, Kamehameha educated 4,835 students in its preschool-to-grade 12 program, which serves about 7 percent of native Hawaiian children.
"We reach more than 12,000 other students through various programs outside of the campuses," said Paulsen.
The trust was established by the 1884 will of Princess Bernice Pauahi Bishop, who devoted her wealth of royal lands to the building and operation of schools to educate children of Hawaiian ancestry.
In addition to education programs, Kamehameha spent $120 million on capital and major repair projects. Among the major projects is the design and initial construction of high school facilities for Kamehameha's Maui and Hawaii campuses.
In the late 1990s, when the five trustees each earned between $800,000 and $1 million a year, the big news of the annual tax return typically was how much they made. But since the investigations of the IRS and the state attorney general and the ouster of the previous board, major educational and financial reforms have been instituted.
Last year, all five trustees together made a total of $525,000. The trustees' individual compensations ranged from a low of $99,000 to a high of $113,500.
The highest paid officer was Wendell Brooks Jr., the trust's former chief investment officer, who received $504,160 in salary and $4,088 in employee benefits. Brooks left in November 2001 and the amount included a severance package, said Paulsen.
Hamilton McCubbin, who resigned recently as chancellor and chief executive, was paid $350,240 in salary, $8,608 in benefits and $103,500 for his expense account and other allowances. McCubbin has a $400,000 severance package with the trust.
Colleen Wong, the chief legal officer for the trust, who has been appointed acting CEO, was paid $168,831 in salary and another $9,231 in benefits. Mike Chun, headmaster of the schools, was paid $195,057 and $1,111 in benefits.
During the height of the scandal of the late 1990s, the trust maintained armies of inside and outside accountants and lawyers. Now, the highest paid outside firm is Group 70 International, a Honolulu architectural firm that was paid $5 million. Arthur Andersen, the accounting and management consulting firm, came in second at $1.5 million.
BACK TO TOP
McCubbin cites threats
against him and family
Hamilton McCubbin, who abruptly resigned as CEO of Kamehameha Schools last week, says he and his family have been subjected to threats and he blames a "dysfunctional part" within the estate.
In a more than 2,100-word essay, which will appear in the Insight section of tomorrow's Star-Bulletin, McCubbin writes about the past and future of the trust he led for three years. He resigned on May 5 after two estate probes into an alleged inappropriate relationship with a female employee. Both McCubbin and estate officials have declined comment on the investigations.
In his essay, McCubbin decries the media attention to his resignation.
"I also transition from the leadership of the Kamehameha Schools with a heavy heart knowing that misinformation has found its way into the media to cast doubt upon my leadership, and more importantly about the people who have served me and with me.
"I will remember the threats on my life, threats of harm to my wife and children, and the continuous need for security at my home to protect us," he writes.
A spokeswoman for McCubbin said he was out of town yesterday and could not be reached for comment on details of the threats.
But McCubbin further writes: "As time progresses and the truths are revealed, it will become apparent that ill will rather than the truth continues to be a dysfunctional part of the Kamehameha Schools. These acts, which appear to be of malicious intent, have no place in an institution devoted to the well-being of others."
The essay addresses a number of other topics, including his achievements at Kamehameha over the last three years and his hopes for the future.
"I transition from the Kamehameha Schools with a renewed sense of hope that the steps taken in the past three years are forward-looking, affirming of all the Hawaiian people and not just the select few, and will be continued on into the future," he writes.