KIRC Now Relying Heavily on State Funding:

Follow-Up on Recommendations Made in Report No. 13-06, Audit of the Kaho‘olawe Rehabilitation Trust Fund

Hawaii State Auditor Report No. 16-03, April 2016

KIRC’s near depletion of the trust fund results in the commission’s dependence on state funding to continue operations

In our follow-up of recommendations made in Report No. 13-06, Audit of the Kaho‘olawe Rehabilitation Trust Fund, we found that the Kaho‘olawe Island Reserve Commission (KIRC) has not implemented our recommendation to establish a comprehensive and measureable restoration plan with meaningful performance measures. The commission has also not aligned its fundraising and spending plans and has failed to ensure the financial sustainability of the Kaho‘olawe Rehabilitation Trust Fund, which will be depleted by FY2018. Although it has released a Six-Year Financial and Work Plan, the commission cannot support its optimistic projections with reliable financial data. Now relying heavily on state funding, KIRC is not financially self-sufficient

Background on Report No. 13-06

Title X of the federal 1994 Department of Defense Appropriations Act conveyed Kaho‘olawe and its surrounding waters to the State of Hawai‘i, ending military use of Kaho‘olawe and authorizing $400 million for ordnance removal, of which 11 percent ($44 million) was made available to the State of Hawai‘i to carry out environmental restoration and other archaeological and educational activities. The $44 million established the Kaho‘olawe Rehabilitation Trust Fund.

KIRC was organized to administer the reserve and develop criteria, policies, and controls for permissible uses of the reserve. The commission can solicit and accept grants, donations, and contributions to the trust fund, as well as delegate to its executive director or employees the power and authority to effectively administer its statutory responsibilities.

We released Report No. 13-06, Audit of the Kaho‘olawe Rehabilitation Trust Fund, in July 2013. The audit was prompted by the 2012 Legislature, which requested through Senate Concurrent Resolution No. 63, Senate Draft 1, that the Auditor determine whether the trust fund was being used in compliance with state laws and any applicable grant agreements, and to effectuate the purposes of Chapter 6K, Hawai‘i Revised Statutes (HRS)–– including the performance of duties and responsibilities of the commission.

In Report No. 13-06, we found that KIRC had not established a comprehensive plan for its restoration effort. Its resource management plan did not include meaningful performance measures to gauge whether its objectives were being met and lacked cost estimates for actions that the commission wanted to pursue. As a result, spending had outpaced revenues and the trust fund, which contained as much as $33.6 million in FY2004, had been whittled down to $8.1 million in FY2012. We forecasted that KIRC would deplete the fund by 2016.

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2013: Audit: Kahoolawe Money Gone After 18 years Without a Plan

KITV: Kaho'olawe Rehabilitation Trust Fund Audit