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The Honolulu Advertiser
Posted on: Tuesday, July 16, 2002

Decision viewed as appeasement to IRS

 •  Kamehameha may alter its admissions policy

By Walter Wright
Advertiser Staff Writer

Some long-time observers of Kamehameha Schools said yesterday a decision by trustees to admit a non-Hawaiian student is undoubtedly part of an effort to protect the schools' tax exemption.

The schools said yesterday in a statement the trustees believe their admissions policy is not racist and is constitutional. But they also said they believe it will be challenged, along with all programs and benefits that give preference to Hawaiians.

Schools chief executive officer Hamilton McCubbin said last week the schools would give preference in admissions to Hawaiians, but only "to the extent permitted by law and the rules governing tax-exempt organizations."

The U. S. Supreme Court decision in the lawsuit by Big Island rancher Freddy Rice overturning the Hawaiians-only voting for the Office of Hawaiian Affairs might be affecting the trustees' thinking on the admissions issue, said University of Hawai'i law professor Randall Roth.

The schools' recent decision to drop ROTC, lunch support and drug education which relied on federal funding was apparently made to deal with the impact of Rice v. Cayetano under the equal protection clause of the Constitution, said Roth, a tax and trust law expert who helped write the "Broken Trust" critique of the former trustees.

The Rice v. Cayetano decision also said Hawaiian is a racial designation, opening the school, rightly or wrongly, to possible attack for alleged racial discrimination, he said.

The Supreme Court held in a 1983 case, Bob Jones University v. United States, that if a school's admissions rules violated a national public policy against racial discrimination, the IRS could revoke the school's tax-exempt status, Roth said.

Purely from a tax and trust law point of view, Roth said, "it makes some sense to get ahead of this issue, to prepare for it."

Rice himself sued over the admissions policy once before and there apparently are groups prepared to sue again, Roth said.

Two other "Broken Trust" authors, senior federal Judge Sam King and former University of Hawai'i Regent Gladys Brandt said yesterday they have faith in the trustees, but Brandt said the new board had failed to recognize the need to communicate before taking such a controversial step.

Former trustee Richard "Dickie" Wong said the new board should have waited for someone to challenge admissions practices before admitting a non-Hawaiian.

The only reason to do otherwise, he said, was if the trustees were required to do so to settle a dispute with the IRS.

Gerard Jervis, an attorney and another former trustee, said he believes the new trustees are probably taking a pre-emptive step to reduce their exposure to charges of racism in admissions.

Even though the schools received a letter from the IRS several years ago expressing tolerance of the preference for Hawaiians, Jervis said, "things change. We've seen the Supreme Court come down with the Rice versus Cayetano ruling since then."

Reach Walter Wright at wwright@honoluluadvertiser.com or 525-8054.