Legal questions from More than $800,000 in approved grants at the Office of Hawaiian Affairs is on hold while the legality of OHA's grant-making authority is challenged by state officials.
state put OHA grants
program in limbo
The attorney general disputes
OHA's power to award grantsBy Pat Omandam
pomandam@starbulletin.comTrustees recently received a Sept. 25 opinion from the state Attorney General's Office advising them not to release any further grants because those expenditures did not go through the state Procurement Code's competitive bid process and therefore may be illegal.
The opinion was sought this past summer by OHA. The office's grant-making authority was questioned by state Procurement Officer Charles Katsuyoshi last December and by state Auditor Marion Higa in a critical audit of the agency this past April.
Katsuyoshi told the 21-year-old agency it is not exempt from the state procurement process and that the code applies to any expenditure. Currently, only grants from the state departments of Health and Human Services are exempt from the code.
Higa said OHA's grants program was used inappropriately to fund purchases of what should be services and subsidies obtained through the competitive bid process.
Higa raised the issue after her audit found about half of the 11 grants awarded by OHA in 1998 and 1999 should have been a purchase of service or subsidy. She cited a case where private operators were awarded several OHA grants to provide case management to AIDS patients in 1994-95 -- an ongoing service that instead should have gone out to bid.
Grants, she said, are intended to be one-time funding awards.
"The practice of using the grant program to fund these services should be discontinued immediately," Higa concluded.
OHA believes it has separate and independent legal authority under the state Constitution to award grants and subsidies from its trust funds.
Even so, OHA board attorney Sherry Broder advised trustees to comply with the opinion. The freeze means those already executed before OHA received the Sept. 25 opinion were OK, but those afterward, scheduled for release over in the coming months, are in limbo.
About six grants totaling $800,000 were affected. OHA officials are compiling a list of affected grants for the board.
"Some made it through and some are hanging," trustee Rowena Akana said during discussion of the opinion Friday at a budget committee meeting.
Trustee Linda Dela Cruz insisted OHA put aside legal risks and execute these grants because the agency cannot go back on its word to beneficiaries.
Grantees may sue OHA if those funds are not released, she said.
But OHA Administrator Clyde Namuo said he will not do anything that may be illegal and will comply with Broder's advice. Namuo said he will work with trustees to find alternative ways to get the money out.
Trustee Charles Ota suggested one option may be to convert these grants into loans that OHA can give to grantees or to have OHA administer these services itself. Another option for trustees may be just to put these grants out for bid to comply with the law.
OHA Chairman Clayton Hee said what is needed is an amendment to the state procurement law in the next legislative session that exempts OHA from these laws.
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