Down $1.7 billion
POSTED: Saturday, January 10, 2009
The value of Kamehameha Schools' endowment fell 18 percent, or $1.7 billion, in the first four months of the 2009 fiscal year and is expected to plunge further amid a dramatic economic downturn.
VALUE OF THE TRUST
Kamehameha Schools has spent more than $1.1 billion cumulatively on educational programs over the past five fiscal years. Here is the trust's endowment for the last five fiscal years:
2008: $9.4 billion
2007: $9.1 billion
2006: $7.7 billion
2005: $6.8 billion
2004: $6.2 billion
The drop to $7.7 billion from July to November from $9.4 billion at the end of the 2008 fiscal year on June 30 reflects the harsh effects of a global financial crisis on even established local institutions. The portfolio totaled nearly $9.1 billion at the end of the 2007 fiscal year.
"While the overall diversification of our portfolio enabled us to weather the initial volatility of the 2008 equity markets, we are by no means immune to the effects of the dramatic fluctuations triggered by the U.S. and global financial challenges that unfolded in the last half of the year," said Kirk Belsby, vice president for endowment, in a 2008 fiscal year education and financial summary released yesterday.
While the portfolio's strong performance earlier last year has provided a cushion, this year's results are expected to drop significantly unless the market recovers in the next six months, he said.
"There are very few places you can hide in the current financial system nowadays," said local economist Leroy Laney.
The state's largest land trust was able to increase the value of its portfolio in the last fiscal year because of Hawaii's strong real estate market and a boost in energy costs, the trust said.
Despite the significant drop in most investment portfolios driven by a global recession, Kamehameha Schools spent more than $273 million, up $23 million from fiscal 2007, on education services for more than 38,100 students—an increase of 2,100 students in fiscal 2007, according to Dee Jay Mailer, chief executive officer.
"We have surpassed the aggressive outreach target we set for the initial three-year ramp-up of our educational outreach," she said.
The endowment performance in fiscal 2008 generated a 7.5 percent return, exceeding both its composite benchmark by 9.5 percent and peer group target by 7.4 percent. The trust recorded $367.9 million in revenue, gains and other support.
"Despite the challenges we are all facing in this state and around the world, Kamehameha Schools will preserve our effective campus, early education and community educational programs," Mailer said. "This is a time for prudence and for focus on harvesting the efforts of our educational plans."