Auditor finds Hawaiian
Homes fund suffers
from poor planning

By Pat Omandam
Star-Bulletin

In 1980 the state departments of Land and Natural Resources and Hawaiian Home Lands signed an agreement on how to pay Hawaiian Homes its constitutionally mandated share of revenue from certain public trust lands.

Now, however, both sides are struggling to live up to their end of the deal -- a problem that shortchanged a state fund used to improve the conditions of native Hawaiians by $346,000, said state Auditor Marion M. Higa.

Higa yesterday released a follow-up audit of the agreement that spells out how Hawaiian Homes would get 30 percent of the revenue generated from leases of sugar cane lands and from water licenses.

In her 41-page audit, Higa said the Native Hawaiian Rehabilitation Fund -- administered by Hawaiian Homes to improve the educational, economic, political and social conditions of Hawaiians -- has suffered because of poor paperwork and planning.

For example, a review of the 82 agreements that fall under the revenue entitlement shows the Land Department did not pay Hawaiian Homes its share from 21 leases and permits on Kauai, Maui and the Big Island because its fiscal office was not notified to change account codes to transfer money to the fund.

the auditor's office estimates that $345,917 is owed to the fund from these agreements. Since the review, the department has made $316,000 in back payments.

Last fiscal year, the fund received $205,312 in revenue entitlements, and $228,041 the year before. Its current balance is about $13 million, according to Hawaiian Homes officials.

The audit noted the lack of a comprehensive inventory of public trust lands is a long-standing problem for the Land Department, although Land Board Chairman Tim Johns said a $2 million computerization project is under way to better manage state lands.

"In the meantime," Higa said, "the Land Department staff rely on arduous manual procedures to monitor leases and permits.

"These procedures include using an antiquated index card system, a manual tickler system for tracking leases and permits, and a manual ledger to record leases and permits."

The Hawaiian Home Lands Department also was criticized for not ensuring the accuracy of the money owed to it and received. Higa said there was no evidence showing it verified information in permits and licenses.

Hawaiian Homes staff told state auditors the issue of revenue entitlements from sugar cane lands and water licenses has not been a high priority for the department. Rather, the focus is developing homestead lands and reducing the size of the homestead waiting list.