The Supreme Court ruled in 2012 that the state “has failed by any reasonable measure, under the undisputed facts, to provide sufficient funding to DHHL.”

As evidence, the Supreme Court pointed to the “tens of thousands of qualified applicants on the waiting lists and decades-long wait for homestead lots.”

But what constitutes sufficient funding is currently being worked out in court.

The Supreme Court returned the case to Circuit Court to determine how much money DHHL should be receiving to cover its administrative and operating costs. This excludes funding for developing homestead lots or making loans, which the court determined is a political question that has to be worked out by the governor and Legislature.

The Native Hawaiian Legal Corp., which brought the lawsuit against the state on behalf of Native Hawaiian beneficiaries, filed a proposal with the Circuit Court in July, arguing that DHHL should receive more than $28 million from the state general fund to cover its administration and operating expenses.

By contrast, the attorney general is arguing that DHHL should receive only $5 million.

In the middle is DHHL itself, which — in an unusual twist in the court case — has broken with the state, even though it’s a state agency, and hired a private attorney to advocate for more money. Essentially, DHHL directors are now siding with the Native Hawaiian Legal Corp., the law firm that sued them.

In a court filing, DHHL concurs with the Native Hawaiian Legal Corp., in arguing that it should receive about $28 million from the general fund for its operating and administrative costs. Additionally, DHHL argues that it should receive $40 million to $50 million in general obligation bonds to cover infrastructure repairs.

Judge Jeannette Castagnetti is currently reviewing the proposals and attorneys involved in the case said that they have no indication on when she might rule on the funding.

“It’s really kind of awkward,” acknowledged DHHL Director Jobie Masagatani in an interview with the Honolulu Star-Advertiser about the department’s stance. She noted that she has been deposed by the state Attorney General’s Office, the same office that generally represents DHHL.

But she says the 2012 Supreme Court ruling makes it clear that DHHL has a constitutional obligation to push the state to fully cover its budget.

“We have a very specific constituency and very specific mandate to look out for the interests and advocate for the interests of beneficiaries,” she said.

During Hawaii’s 1978 Constitutional Convention, delegates amended the Constitution to require the state to fund DHHL.

Attorney General Doug Chin argues in court filings that delegates estimated that the cost of administering the Hawaiian Homes program would be about $1.3 million to $1.6 million. Thus, the state should only be on the hook for $1.3 million, adjusted for inflation, which comes out to $5 million, according to Chin.

Any amount above this level becomes a political question that’s outside the realm of the courts, he argues.

But DHHL says that this amount doesn’t even cover approved staffing levels. Moreover, DHHL’s needs have grown significantly since the convention.

For instance, in 1976 DHHL had about 5,000 applications for homestead plots. That number has ballooned to 43,000 applications today.

Masagatani said that she was disappointed by the state attorney general’s assessment.

“We as a state, not just DHHL, we as a state accepted this responsibility to administer this program in the best interest of beneficiaries,” she said.

The Attorney General’s Office declined to comment on the case, citing the ongoing court deliberations.

In 1920, Congress passed the Hawaiian Homes Commission Act, which set aside about 200,000 acres of land for Native Hawaiian homesteads. The federal government’s funding of the program was anemic for decades. When Hawaii became a state in 1959, the federal government conveyed the land to the state and required it to administer the program.

Native Hawaiians with a blood quantum level of 50 percent or higher can qualify for the lands, which come with a 99-year lease at a cost of $1 per year. Beneficiaries must cover the costs of building a home or paying for a home mortgage.

The state’s funding of DHHL has wavered over the years. General-fund appropriations stood at a high of $4.3 million in the 1992 fiscal year and fell to zero under former Gov. Linda Lingle, who cut the funding to save money during the economic downturn.

Currently, DHHL receives $9.6 million from the general fund.

DHHL has controversially relied on leasing some of its lands to commercial developers, such as Walmart, OfficeMax, Target, Safeway and Home Depot, to fund its work. It’s also relied on a $600 million settlement with the state for misusing its lands. But that funding ran out in June.

Rep. Kaniela Ing, chairman of the House Committee on Ocean, Marine Resources and Hawaiian Affairs, said he would be advocating that DHHL receive more money this legislative session, which begins in January.

He called the attorney general’s position that DHHL was only entitled to $5 million “completely unrealistic.”

“It is really a pivotal time for Native Hawaiians,” he said, noting the upcoming constitutional convention and proposed federal rules exploring the creation of an independent Native Hawaiian government. “But the most important thing to meeting that goal of self-determination is land for Hawaiians. And realistically, if we don’t protect the land assets we have now, self-determination will never be feasible. So it is important that the state meet its requirement to fund DHHL.”

At the same time, he said it’s important that DHHL show that it’s making good use of the money. “If the state is putting in money, we expect to see more homesteaders on homelands,” he said.

There are currently more than 27,000 Native Hawaiians waiting for homestead plots, including residential, agricultural and pastoral parcels, according to DHHL.

Two of the six Native Hawaiian plaintiffs who originally sued the state for underfunding DHHL have since died, according to court documents.