Court-appointed consultants are recommending approval of Kamehameha Schools’ contribution to the $4 billion settlement fund that will be used to pay victims of the 2023 Maui fires.

But big gains in Kamehameha’s investments last year, as well as insurance payments, will help to minimize the impact of its $872 million contribution to the global settlement, according to tax filings recently submitted to the state probate court.

The total value of Kamehameha’s endowment, bequeathed to it by the late princess Bernice Pauahi Bishop, stands at about $15.2 billion. Even after accounting for the settlement contribution, the schools ended last fiscal year with net assets of about $10.4 billion, slightly less than a year prior.

Taking all that into account, court-appointed special master Ben Matsubara on Monday recommended that the court approve Kamehameha’s contribution to the wildfire settlements, a requirement for the settlement to be finalized.

Quoting a letter from lawyers to a Kamehameha vice president advising on the contribution to the global settlement, Matsubara wrote that “it would be imprudent not to agree” to the settlement.

In a separate filing earlier in May, the schools’ trustees wrote that they believed that contributing to the settlement would be in the best interest of the trust, which is primarily used to fund the education of more than 5,300 students across three main campuses.

In a written statement, Kamehameha said that the settlement is an important part of efforts to restore Lahaina.

“It brings finality and certainty for all involved by providing a clear path forward to compensating those who suffered tremendous loss while reducing prolonged and costly litigation,” spokesman Sterling Wong said.

Kamehameha plans to spread the cost over time to limit impacts to educational programs.

A hearing to decide on Kamehameha’s contribution is scheduled for July 24 before First Circuit Judge Jeannette Castagnetti.

Investments Grew

Payments from insurers totaling $145 million will help to offset the settlement costs, as will a credit of about $17.5 million contributed to the One Ohana Fund, a prelude to the global settlement.

The actual wildfire claims that Kamehameha will owe will total about $727 million, which will be paid in four equal installments starting next year.

A growth in the schools’ investment portfolio could help to insulate its assets.

Kamehameha’s investments rebounded last year after a slump that began in 2022. The value of the schools’ non-publicly traded investments grew $680 million between 2023 and 2024, hitting a record high last year of $10.1 billion.

The school posted a deficit of $819 million last year, due in large part to the contribution to the wildfire settlement. But the school still ended the year with $10.4 billion dollars in net assets.

Julian Ako, a former high school principal at the Kapālama campus, is happy to see the school doing well financially for now.

But, “that’s still a big dent,” he said of the fire settlement.

For Ako, it comes down to opportunity costs, or what won’t get funded because the school needs to spend $872 million.

“What is that going to do in terms of service to beneficiaries?” Ako said.

In his statement, Wong said that the financial impact will be considerable.

“However, it will not change who we are or why we exist,” Wong said.

Last August, as details of the settlement were just becoming known, CEO Jack Wong sent a letter to beneficiaries saying that Kamehameha would only agree to the settlement if it got support from the state and Maui County to develop its vast land holdings.

Wong’s letter called on the state to commit to the restoration of Lahaina, support Hawaiian education projects and, together with the county, sign a memorandum that would allow Kamehameha to develop its properties “to reduce the impacts of this settlement on Native Hawaiian education.”

State and school officials have been tight-lipped about negotiations. Kamehameha representatives declined to talk about them on Wednesday.

A note on Kamehameha’s recently filed financial statements says that the schools “contemplate future coordinated efforts with the community, the State, and (Maui) County, to restore Lahaina.”

Kamehameha Schools owns 1,300 acres of land in West Maui, most of which is mauka of the Lahaina Bypass Road. Those lands are slated for numerous agricultural and forest restoration efforts.

Lands on the makai side of the highway could feature a school, areas for cultural practices, parks, commercial centers and housing, according to the school’s website detailing its vision for the lands it owns in Lahaina.

Settlement Moving Along

Kamehameha Schools and its trustees are named as defendants in more than 700 lawsuits filed over the Lahaina wildfire that killed more than 100 people in August 2023 after a downed Hawaiian Electric Co. powerline ignited dry brush that spread across lands owned by the school.

Going to trial could mean exposing the trust to well more than the $872 million it is contributing to the settlement fund.

Kamehameha’s contribution will go directly to paying victims of the Lahaina fire and will be separated from the pool of funds used to pay fire victims across Maui, according to court records.

Approval from the probate court is one of the last steps to clearing the way for the settlement to be finalized and for victims to begin receiving compensation.

On Tuesday, Gov. Josh Green signed into law the state’s commitment to contribute $807 million to the fire settlement, clearing another significant hurdle.

“It should not take years for people to see compensation or begin rebuilding,” Green said in a press release announcing the bill signing. “This is about healing, restoring trust and helping families recover as quickly as possible in the place they call home.”

Correction: This story has been updated with the correct spelling of Judge Castagnetti‘s name.