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The Honolulu Advertiser
Posted on: Thursday, January 15, 2004

Kamehameha's reach expands

By Vicki Viotti
Advertiser Staff Writer

Kamehameha Schools has made strides down its prescribed path toward educating more Hawaiian children, judging by its 2002-03 annual report and testimonials from some who have watch-ed the money in action.

The report says a record 158,000 children benefited from its educational programs, both on its three campuses and in an expanding number of initiatives to serve Hawaiian children not admitted to the Kamehameha Schools.

The raw numbers from the report, released yesterday, indicate a $47 million increase in educational spending during the fiscal year that ended June 30 over that of the previous year. They also show the start of financial recovery for the multi-billion-dollar trust from the 2001-2002 economic slump.

The endowment for Ka-mehameha Schools, now worth an estimated $5.5 billion, benefited from an upswing in the local real estate market as well as improved performance of its investment portfolio.

But for someone like Lynn Fallin, director of Ho'okako'o Corp., here's the real bottom line: Her program of converting select public schools to charter campuses that can better serve Hawaiian children is up and running.

Kamehameha finances the corporation, formed in response to 2002 legislation that allows nonprofit foundations to help run conversion charter schools. Wai-mea Middle School, where 40 percent of the students are Hawaiian and many are socio-economically disadvantaged, has converted with the help of $700,000 from the trust, Fallin said.

"If it wasn't for Kamehameha Schools, we would definitely not be in existence, and we would not be able to reach out to those critical-need children in a timely way," she said.

Ho'okako'o is one of the beneficiaries of more than $7 million spent last year on the schools' "Pauahi Legacy Lives" initiatives. These also included grants for non-Kamehameha preschools to boost them toward accreditation.

The schools invested more than $289 million in educational programs, including money for campus-based and community outreach programs and the financing of $70 million in capital projects. Much of this spending goes toward the continued expansion of the schools' Maui and Big Island campuses, where enrollment expanded to ninth grade during the reported fiscal year, said Charlene Hoe, interim vice president for education.

LeRoy Akamine is one of the Kamehameha alumni pleased to hear about the educational emphasis. "We're a school and the product is the students that we graduate and the students that we educate," Akamine said.

However, the trust has set a guideline of keeping its educational spending to about 4 percent of the five-year average market value of its endowment, said Michael Loo, vice president of finance and administration.

The total endowment returned 5.7 percent for the year, according to the report.

The school's investments earn-ed revenues of about $544 million for the 2003 fiscal year and net assets increased by about $304 million. The endowment market value rose by $100 million to about $5.5 billion. By comparison, in the 2001-02 fiscal year Kamehameha's portfolio lost 0.7 percent and its endowment market value dropped by about $324 million.

Some of the increase is due to gains from the sale of assets such as the methane gas company Kukui Inc. almost a year ago, said Kirk Belsby, vice president for endowment.

The Kamehameha Schools holdings, a legacy of Princess Bernice Pauahi Bishop left in 1884, once were almost all in real estate. Today, a third are in real estate, and the remainder are in financial assets.

Reach Vicki Viotti at vviotti@honoluluadvertiser.com or 525-8053.