State owes DHHL $18.4M more

The state owes nearly $20 million to the Department of Hawaiian Home Lands for violating the state Constitution by failing to adequately fund the department for more than two decades, a state judge has ruled.

First Circuit Judge Jeannette Castagnetti issued her decision late Friday, saying that the state Legislature violated its constitutional duty “to appropriate sufficient sums to the Department of Hawaiian Home Lands for its administrative and operating budget.”

“This failure includes every fiscal year since at least 1992,” she wrote. “DHHL suffers from a lack of funding and staffing, which adversely affects beneficiaries of the Hawaiian Home Lands Trust.”

In her ruling, Castagnetti said the Legislature is obligated to appropriate more than $28 million to DHHL this fiscal year for its administrative and operating budget. This year, legislators have only appropriated $9.6 million.

The nonprofit Native Hawaiian Legal Corporation filed the suit in 2007 on behalf of six Native Hawaiians.

Moses Haia, the executive director of the law firm, said the ruling may result in a significant increase in the number of beneficiaries living on Hawaiian Home Lands.

David Kimo Frankel, lead attorney for the plaintiffs, said that during the next legislative session, lawmakers must appropriate the remaining $18.4 million that DHHL requested for this fiscal year and about $28 million for next fiscal year.

“It’s a great decision,” Frankel said, adding he was hopeful the ruling will help beneficiaries get off the waiting list and on to homesteads sooner. “The next step is to get the money released to the department.”

He said lost funding from previous years cannot be recouped.

Castagnetti’s ruling was the second time a judge ruled on the case in Circuit Court; the first time came in 2009, when a judge ruled in favor of the state. The decision was overturned on appeal and reached the state Supreme Court, which said in 2012, “The state’s track record in supporting DHHL’s success is poor.”

DHHL spokeswoman Paula Aila on Saturday called the ruling “good news,” and said it will allow DHHL to dedicate trust funds to serving beneficiaries instead of covering operating expenses.

Attorney General Doug Chin said in an emailed statement Saturday that the judge’s decision may affect the current fiscal year’s state budget as well as state budgets for future fiscal years.

“We will review and evaluate whether to appeal,” he said.

Sen. Maile Shimabukuro, chairwoman of the Hawaiian Affairs Committee, said the decision was “a big victory for the DHHL beneficiaries,” especially because a two-decade settlement that brought $30 million a year to DHHL ended in June.

The settlement was enacted into law in 1995 and required the state to pay DHHL $30 million a year for the wrongful use and withdrawal of Hawaiian Home Lands from the trust. The money was meant to be separate from DHHL’s operating budget, but DHHL had to rely on it for administrative and operating expenses, the judge’s decision said.

According to Castagnetti’s decision, DHHL requested no funds from the Legislature to pay for its administrative and operating budget from fiscal years 2010 to 2013. She said DHHL has a duty to ensure it receives all the funding to which it is constitutionally entitled, including by filing a lawsuit.

Prior to 2012, DHHL officials “breached their trust duties by failing to seek from the Legislature all the funding (DHHL) needs for its administrative and operating budget,” Castagnetti said.

Since 2014, the Legislature has provided $9.6 million a year to the department.

The six original plaintiffs who sued the state for failing to fund DHHL and sued DHHL for failing to seek money from the state are: Richard Nelson III, Kelii Ioane Jr., Sherilyn Adams, Kaliko Chun, James Akiona and Charles Aipia.

Ioane applied for a homestead lease in 1981 and is still waiting for an agricultural or pastoral lot, the decision said.

Akiona and Aipia have since died.