OHA grapples
with funding of
trustee’s pension

Moses Keale's supplemental
package draws the wrath of the
vocal board minority

By Pat Omandam
Star-Bulletin

For the first time in its 19-year history, the Office of Hawaiian Affairs will use trust funds set aside to benefit Hawaiians to pay for a retirement package for one of its trustees.

The board action came after years of unsuccessful attempts at the state Legislature to include OHA trustees under the state Employees' Retirement System. A bill to do so this spring died in the waning days of the session.

But the six trustees who supported a supplemental retirement package worth $35,000 a year to trustee Moses Keale yesterday drew the wrath of the vocal board minority and Hawaiians who attend OHA meetings.

They questioned the plan's motive and timing, and complained that it wasn't fully discussed in the Hawaiian community, which the nine trustees represent.

"This 'retirement payoff payment' is designed to strengthen the present secretive, divisive and punitive style of leadership of this board, a very dangerous brand of leadership that threatens the inherent sovereign right of the beneficiaries of this office," testified Richard P. Kinney of the Hawaiian Political Action Council of Hawaii.

No statutory authority?

The OHA board last month authorized Administrator Randy Ogata to create a supplemental retirement plan for trustees. Under the plan, trustees qualify for the retirement program if they are age 60 or older. The plan provides a maximum of $24,000 a year to trustees, with the actual amount based on the number of four-year terms they served on the OHA board.

For example, a fully vested trustee must serve three terms, or 12 years, to receive the maximum income. Those with two terms would receive $16,000, while one-term trustees would get $8,000.

These entitlements, however, would be offset by any other retirement income received by the retiree, except Social Security payments. Medical, prescription drug, vision care and dental are also provided if the retiree has no other retirement health coverage.

And OHA would pay for $7,500 in life insurance for the trustee to cover funeral expenses.

"This plan was designed to be offset by any other retirement benefits received, whether it be public or private," Ogata told trustees.

All the money for the program comes from OHA trust funds, valued at $322 million as of April 30.

The $35,000 for Keale's retirement plan was included in OHA's $4.6 million base operating budget approved yesterday by the six-member majority. Trustee A. Frenchy DeSoto voted against the budget because of the retirement provision, while trustees Colette Machado and Haunani Apoliona abstained from the vote.

In their written dissent yesterday, the three said the plan lacked a full review by beneficiaries. Moreover, they said there is no constitutional or statutory authority that allows the use of funds for trustee retirement, and worry that using them as such is a breach of their fiduciary duty.

Full-time hours for part-time pay

They added that all trustees were aware when they ran for office that the job did not include retirement pay.

OHA Chairwoman Rowena Akana explained after the meeting that the retirement plan is effective only for the 1999-2000 fiscal year and could not apply to the other trustees. She described it as a stopgap measure until the Legislature approves a retirement plan.

She added that the idea of an OHA-funded retirement plan has been on the board table for two years and that the package Keale receives is less than retirement benefits received by comparable state officials.

Keale has served on the board for 19 consecutive years. He is confined to a wheelchair because of his poor health.

While the job of trustee is listed as part time for $32,000 a year, Akana said trustees put in full-time hours. She called it "ludicrous" to ask them to give up most of their time without any retirement compensation from the agency.

Meanwhile, OHA board attorney Sherry Broder said there was no problem with trustees voting on their own retirement because there is precedent in the Legislature, where lawmakers vote on their own pay increases.