The Office of Hawaiian Affairs wants an annual cap on ceded land payments state agencies make to it raised from $15.1 million to $35 million.

OHA officials used a Senate Water and Land Committee meeting Thursday to tell legislators they need more money for programs they say are underfunded.

“This is the revenue we use to try to improve the lives of our beneficiaries,” said Jocelyn Doane, OHA’s public policy manager.

OHA Office of Hawaiian Affairs office. 6 sept 2016
The Office of Hawaiian Affairs wants the cap on ceded land payments lifted. Cory Lum/Civil Beat/2016

Revenues from ceded lands — public lands set aside to benefit Native Hawaiians — account for one-third of OHA’s operating budget, CEO Kamana’opono Crabbe said.

State departments transferred nearly $17.4 million to OHA in the 2018 fiscal year, according to a recent report to the Legislature. The departments are required by law to transfer 20 percent of revenues they generate on ceded lands to OHA, even if those payments might exceed the $15.1 million cap.

OHA is mandated by state law to put the money that exceeded the cap into a holding account, which was created to make up for any shortfalls if OHA doesn’t get as much as it expects from the state.

Since 2012 however, the annual payments from ceded land revenues have either met or exceeded the $15.1 million mark.

In fiscal year 2017, the office had to send back $5 million to a holding account because payments exceeded the cap. That overpayment fund now totals $20.1 million, according to the Department of Budget and Finance.

“The Native Hawaiian community has returned $20 million to the trust holding account that could be otherwise used,” Doane said.

The Legislature set the $15.1 million cap in 2006. An executive order signed by then-Gov. Linda Lingle the same year required state agencies to pay 20 percent of ceded land revenues to OHA, with the money exceeding the cap going into a holding account.

Now, OHA officials say that it’s time for the cap to be raised.

They’ve tried twice in the last two years to do that. A bill introduced in 2016 would have eliminated the cap entirely. Another in 2018 would have set the cap at $35 million. Both died in committees.

Years-long disputes over legislation and statutes has resulted in an accounting spider web with OHA and different state agencies all interpreting the law in different ways.

“We realized we’re all working in silos,” said Ford Fuchigami, Gov. David Ige’s administrative director.

Last year, OHA contracted the accounting firm N&K CPAs to conduct a review of ceded land payments from fiscal year 2016.

The firm found that $247 million in ceded land revenue from the state departments went unreported in that time frame, according to OHA’s report to the Legislature.

Sen. Kai Kahele said at a Senate committee meeting Thursday that state agencies should do a better job of reporting ceded land payments. Blaze Lovell/CivilBeat

“N&K CPAs also found that agencies were still under-reporting based on the outdated practice of only reporting receipts that OHA had historically claimed, or they were not reporting certain receipts inadvertently or for no apparent reason at all,” OHA’s report said.

Sen. Kai Kahele, the Water and Land Committee chair, said Thursday that all state agencies, along with OHA, must be transparent with how they use ceded land revenues.

He said that the state departments should report all revenues, even those they aren’t required to pay to OHA, because it helps legislators make policy decisions.

Kahele said during the meeting that OHA needs to be accountable for its finances and figure out how to best use the $15.1 million it has now.

“It’s up to legislators to approve laws that allow Native Hawaiians to benefit from ceded land revenues,” he said.

Last January, the state auditor issued a scathing report on financial mismanagement at OHA.

The audit targeted financial abuse by Crabbe, who signed off on funding for unqualified organizations, and OHA’s trustees, who tripled their personal allowances and spent some of them on questionable expenses.

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