With Hawai'i facing perhaps its biggest financial challenge in state history, it is vital for public officials to act smart, act fast and act compassionately in helping our people weather this difficult period.

Of particular concern for the Lingle-Aiona administration is the fate of our community partners in the nonprofit sector. Some of these charities are worried, and understandably so, because funding from government agencies and corporate sponsors is expected to fall significantly in 2009.

These funding decreases would result in staff cuts at charities, just as demand for the critical services they provide is escalating.

At a recent meeting with numerous nonprofit groups from around the state, I joined other members of the Lingle-Aiona administration in sharing the latest information about financial realities in Hawai'i.

Because of a projected $1.1 billion revenue shortfall by 2011, Gov. Linda Lingle ordered all state departments to prepare budget cuts ranging from 10 to 20 percent. These cuts will be painful, no doubt, but they must be made to comply with state law that prohibits the state from having a budget deficit and for Hawai'i to emerge stronger in the years ahead.

In addressing this financial crisis, the administration is pursuing a comprehensive, five-point action plan to stimulate and strengthen the economy and create jobs. One element of this plan involves maximizing federal dollars and partnerships, which would pay tremendous dividends.

While there is talk in Washington about a federal bailout for the states, those plans may not materialize for some time. However, there is something our state can do right now, and do very easily, that will bring considerable relief to charitable groups and the many thousands of families and individuals they serve.

If state legislators vote to remove the spending freeze they imposed last session on our federal anti-poverty funds, an additional $28.2 million would instantly be available to help meet the needs of Hawai'i's most vulnerable residents. Considering the current economic situation, this action should be a high priority for the Legislature when it convenes in mid-January.

To provide some background, the Department of Human Services receives nearly $99 million in federal funding every year through the Temporary Assistance for Needy Families program. This money is allocated to Hawai'i so our residents can escape poverty or, better yet, avoid falling into poverty.

Instead of keeping $28.2 million in a reserve fund that can only be used for cash assistance payments to families on welfare in future years, we should use this money to support social programs that can help people immediately and reduce the factors that might cause individuals and families to fall into poverty in the first place.

Clearly, preventing poverty is key. The Lingle-Aiona administration firmly believes it is much simpler and far more cost-effective to help young people succeed in life so they never need a welfare check, than it is to rehabilitate adults who are already mired in poverty.

In other words, for every dollar we spend "upstream" on anti-poverty programs that help youth complete their education, prepare for rewarding careers and avoid substance abuse and out-of-wedlock pregnancies, we improve lives and save countless dollars "downstream."

For the past five years, DHS has been making a significant investment of TANF federal funds "upstream" to help prevent poverty. This investment is paying off. It's no coincidence that the U.S. Census Bureau named Hawai'i as one of only 12 states to see a decrease in poverty over the past year.

Because at-risk families are growing stronger thanks to additional TANF-funded social services, the number of children in our foster care system has plunged to a 15-year low. And more importantly, the rate of child re-abuse has dropped nearly three-fold, meaning our keiki are now among the safest in the nation.

Also, the investment DHS has made in a wide range of positive youth development programs since December 2003 helped produce a significant drop in pregnancies among Hawai'i teens. In 2004 alone, the reduction in pregnancies saved state taxpayers $21 million in social service costs, according to the National Campaign to Prevent Teen and Unplanned Pregnancy.

The fiscal wisdom of investing in programs that reduce teen pregnancies was detailed by Governing magazine last month in an article entitled "The Prevention Payoff."

The author, Jonathan Walters, made the point that we "absolutely can calculate savings achieved through prevention by comparing the cost of risky and unhealthy behavior against what those costs would be if fewer people were pursuing (or falling into) such behavior." He added that "there's probably no better area in the human services world where the value of prevention can be proved than in the area of teen pregnancies."

Walters noted that there "will be a powerful temptation to cut money for such 'soft' programs as those aimed at teen-pregnancy prevention" in these troubled financial times. He emphasized, however, that investing in prevention is "the single best way to reduce the cost of providing human services."

With the need for teen pregnancy prevention and other positive youth development programs rising, it would be unconscionable to force charities into staff layoffs and service cutbacks when there is an ample supply of federal money sitting idle in a reserve fund.

Now is not the time to hoard federal money that is intended to help the most vulnerable among us. Spending that money today on prevention programs will pay tremendous dividends in the months and years to come.

Lillian B. Koller is the director of the state Department of Human Services. She wrote this commentary for The Advertiser.