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The Honolulu Advertiser
Posted on: Wednesday, February 19, 2003

Education tops trust's spending despite losses

By Jennifer Hiller
Advertiser Education Writer

Even as Kamehameha Schools saw major losses in revenues last year, the trust spent a record $223 million on educational programs and reached 16,000 children of Hawaiian descent.

Where the trust's money is spent

Revenue from the trust finances Kamehameha's three campuses and preschool programs.

Dollars for education

  • $223 million spent on educational programs 2002
  • $206 million spent on educational programs 2001

Spending in 2002

  • $81.2 million at the trust's three campuses
  • $4.7 million on summer programs
  • $17 million on early childhood education
  • $16.7 million on financial aid and scholarships
  • $3.4 million brought in from tuition and fees

Spending in 2001

  • $5.4 million on summer programs
  • $14.5 million on early childhood education
Total revenue for the educational nonprofit was down $850 million, according to an annual financial report released yesterday.

In 2001, the estate earned more than $654 million, mostly from the sale of 16.5 million shares of Goldman Sachs; last year it had losses of $136 million.

The trust's total 2002 portfolio stood at $5.4 billion, compared with $5.7 billion in 2001, a 5.6 percent decline.

Turbulence in the U.S. financial markets caused the declines, but officials say it does not affect the long-term financial stability of the trust or its renewed emphasis on expanding the educational programs.

Hamilton I. McCubbin, chief executive officer of Kamehameha Schools, said that given the poor performance of the stock market last year, the trust has weathered difficult economic times well and has outperformed most other large foundations, as well as the S&P 500 and the Dow Jones Industrial Average.

The estate, the largest nonprofit in Hawai'i and one of the wealthiest in the nation, has worked toward a major shift in philosophy to remake Kamehameha Schools into an educational group supported by an endowment, not simply a powerhouse private foundation. Following years of criticism, trustees have also tried to increase the number of Hawaiians served.

"Right now the guidance from trustees is to continue expanding the reach," McCubbin said. "No cutbacks are expected."

The 96-page financial report covers July 1, 2001, through June 30, 2002.

Focus is on Native Hawaiians

Kamehameha Schools, which educates Hawaiian children, was created in 1884 by the will of Princess Bernice Pauahi Bishop, great-granddaughter of King Kamehameha I. Revenue from more than 300,000 acres of Hawai'i land and other investments around the world is used to finance the Kamehameha Schools' 600-acre Kapalama campus in Honolulu, two smaller campuses on Maui and the Big Island and preschool programs throughout the state.

The $223 million spent on educational programs last year is a $17 million increase over the previous year. Spending included $81.2 million at the three campuses. Spending on summer programs declined, from $5.4 million in 2001 to $4.7 million, but spending on early childhood education increased from $14.5 million to $17 million. The trust spent $16.7 million on financial aid and scholarships.

The schools brought in $3.4 million in tuition and fees.

Although the trust plans an aggressive expansion of its preschool program for 3- and 4-year-olds, Kamehameha Schools will put a halt to building more preschools. Instead, it will work with existing accredited preschools to try to serve more Hawaiian children. "It's less commitment to bricks and mortar," McCubbin said. "We want to get Hawaiians into a wide range of educational opportunities — not just what KS builds."

The trust served a record 16,000 children last year, with 5,025 students enrolled throughout its K-12 and preschool system, along with thousands of other children in summer and extension programs.

McCubbin said those numbers should continue to grow as the trust works to reach more Native Hawaiian children by working with other childcare providers and the public school system.

Kamehameha preschools is the state's second-largest provider of preschool services, after Head Start. Now the trust plans to expand to reach 11,000 children within five years and all Native Hawaiian children — estimated at 30,000 — in 15 years.

Kamehameha also wants to convert campuses with high numbers of Hawaiian students into charter schools. The move would allow the trust to extend its reach without having to build more campuses, as well as increasing investment in high-poverty schools.

Former trustees for Kamehameha, then known as Kamehameha Schools Bishop Estate, had been criticized in the 1990s for pulling back outreach programs and focusing spending on a small number of students at the school campuses.

Many apply, few get in

Even with the rapid expansion of the Maui and Big Island campuses, the schools statewide admit an average of 14 percent of the students who apply. Last year, 5,672 students applied to one of the three campuses and 796 were admitted.

Enrollment in the kindergarten through 12th-grade programs stood at 3,804 students last year, a 6 percent jump over the previous year. The bulk of students — 3,192 — attended O'ahu's Kapalama campus, while 340 students were enrolled on the Big Island campus and 272 at the Maui campus.

Enrollment at the main Kapalama campus should remain at about 3,200 students, while the Hawai'i and Maui campuses are expected to triple in size as their high-school programs grow. By 2005, Kamehameha Schools' total enrollment at all campuses should reach 5,000, where it is expected to stabilize.

The trust is also looking into a controversy that erupted last summer when alumni learned of a decision to admit a non-Hawaiian student to the Maui campus. Under the current policy, Kamehameha Schools gives Hawaiians preference, but can admit other students when that pool is exhausted.

Data from a series of public meetings on the issue will be reported to the trustees March 20. Trustees are looking at whether to change admissions criteria to include students who fall into the lower tiers on the Stanford Achievement Test or are in a lower socioeconomic group.

Reach Jennifer Hiller at jhiller@honoluluadvertiser.com or 525-8084.