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Guest Commentary – Audit the Honolulu Rail Project

Dear Damon,

When the Grassroot Institute of Hawaii first kicked off our “Audit the Rail” campaign, we had a feeling the idea would catch on.

Over the summer, we’ve seen respected voices across the state join the chorus.

At the outset, we did some digging and uncovered the fact that several HART board members supported a forensic audit of the rail.

Following that, the Honolulu Star-Advertiser published a story echoing our call to audit the rail explicitly for fraud, waste and abuse.

Then, Honolulu Councilmember Trevor Ozawa introduced a resolution to perform a special audit of the rail. Since then, at least four other Honolulu Council members have endorsed an audit.

And now, state legislators are floating the idea of auditing the rail, according to a presentation leaked to the press last week.

As influential voices across the state join the Grassroot Institute’s call to audit the rail, we intend to continue making a reasoned case for a full forensic audit.

If you have not yet signed our petition, please do so at AuditTheRail.com and share this e-mail with your friends.

Mahalo for helping this idea to catch on.

E Hana Kakou (Let’s work together!),

Keli’i Akina, Ph.D.
President/CEO Grassroots Institute of Hawaii

Half a Million Dollars of Public Pension Money Paid to Dead People in Hawaii

In a shocking example of outmoded systems leading to government waste, the Grassroot Institute of Hawaii has learned that $538,519.25 of public pension money was paid to dead people in Hawaii between 2010 and 2015.

Click to view full list

Click to view full list

According to the state’s own records, at least 134 deceased persons received over-payments from the Employee Retirement System, with some over-payments in excess of $50,000.  So far, reimbursements are pending.

Dr. Keli’i Akina, President of the Grassroot Institute, said, “Our report shows that we are taking money from the living to pay for the dead.  Shining a light on wasteful spending is in the best interest of public pension members and Hawaii’s taxpayers.”

The Grassroot Institute obtained the information through an open records request to the Employee Retirement system.  The report, which can be found on OpenHawaii.org, showed that in 2013, $207,656 was overpaid to the deceased beneficiaries; and in 2014, the number was $138,221.  However, the real number is likely to be much higher, as the Employee Retirement System acknowledges that it hasn’t yet caught all of the errors.

Dr. Akina said, “It may be difficult for the State of Hawaii to know if a member of the pension fund has passed away, especially if the individual has left the state, or moved to another country.  Hawaii’s taxpayers continue to pay this enormous cost as we close the gap on the public pension unfunded liability crisis.”

Hawaii’s unfunded pension liability is $8.5 billion, which puts taxpayers on the hook for $21,272 per household.

Wesley Machida, State Finance Director responded in a written statement to the Grassroot Institute, “The half a million dollars of pension overpayments are due entirely to the untimely reporting of a retirant’s or beneficiary’s passing.  Within the past year, the State of Hawai‘i Employees’ Retirement System (ERS) has improved its efforts to identify overpaid pensions by working with the Department of Health, State of Hawai‘i.  A national company is also used to identify retirees and beneficiaries who are deceased.  The ERS also reviews daily obituaries and receives communications from family members and friends.  While there could be others not reported, the likelihood of these occurrences are minimized with the increased efforts of the ERS.”

Wesley Machida continued, “It can be difficult to identify pensioners or beneficiaries who passed away when there are no surviving family members and /or if the retirant or beneficiary lives out of state or out of the country.  In addition, family members and friends may not report the passing for several months, following the discovery of retirement documents while closing out the decedent’s estate.”

Wesley Machida concluded, “The ERS currently pays out more than $1.1 billion per year in pension benefits to more than 44,000 retirees and beneficiaries.”

The Grassroot Institute of Hawaii will continue to research public pension abuse, and publish transparency data on OpenHawaii.org as this story unfolds.  Hawaii’s citizens should also keep in mind that record-keeping in this area wouldn’t be such an issue if government employees were enrolled in 401(k)-style retirement plans rather than the antiquated defined-benefit plans provided to government workers currently.

Grassroot Institute Investigates Questionable Procurement by Native Hawaiian Roll

A request by the Grassroot Institute of Hawaii for information about the expenditures of the Native Hawaiian Roll Commission has led to additional questions about the Commission’s possible violation of the state procurement code.

Former Hawai`i Attorney General Michael Lilly has requested that the Directors of the Departments of Commerce and Consumer Affairs and Accounting and General Services review whether the expenditure of over $800,000 on two vendors by the Native Hawaiian Roll Commission without public bid violated the State’s procurement code.  Such a violation of the code is subject to possible criminal and civil penalties.

The Grassroot Institute requested from the Office of Hawaiian Affairs the check register of the Native Hawaiian Roll Commission as part of their ongoing government transparency effort. With the Commission’s response now made public, citizens and government observers have been stepping forward with more questions about the expenditures listed and the process behind them.

Click to view

Click to view

In his letters sent as a private citizen to the state department directors, Michael Lilly states:

Some $4 million was reportedly transferred by OHA to the NHRC. The attached ledger summarizes payments by the NHRC to various vendors including over $600,000 to Makauila, a multimedia company … Another some $200,000 went to “1013” which is a branding company found on your web site here as “One Zero Ten Three” … None of these payments to vendors apparently complied with the procurement code, Chapter 103D.

According to Keli’i Akina, Ph.D., President/CEO of Grassroot Institute, “Much of the money being spent by OHA and the Native Hawaiian Roll Commission could better be used to meet the real needs of Hawaiians for housing, job opportunities, education, and health-care.  And, if any of this public money is being fraudulently used, OHA and the Roll Commission must be held accountable.”

Mr. Lilly added in a statement to Grassroot Institute: “The procurement code was established to ensure transparency and openness in public bidding, to ensure everyone has an equal right to bid on public contracts and to protect public funds from being overspent on insider deals.”

The letters from Mr. Lilly referenced above as well as the Native Hawaiian Roll Commission’s check register and expenses are posted at Grassroot Institute’s Transparency website, OpenHawaii.org.

About Grassroot President:
Keli’i Akina, Ph.D.,  is a recognized scholar, educator, public policy spokesperson, and community leader in Hawaii.  Currently, he is President/CEO of Grassroot Institute of Hawaii, a public policy think tank dedicated to the principles of individual liberty, free markets and limited, accountable government.  An expert in East-West Philosophy and ethics, Dr. Akina has taught at universities in China and the United States and continues as an adjunct instructor at Hawaii Pacific University.  Dr. Akina was a candidate for Trustee at Large of the Office of Hawaiian Affairs in the 2014 General Election run-off.

Commentary: Hawaii Speaker Endorses Jones Act Reform

Commentary from the Grassroots Institute of Hawaii:

The effort to improve Hawaii’s economy has taken an important step forward with the introduction of a series of resolutions supporting a limited exemption to the US-build requirement of the Jones Act. House Speaker Joseph Souki (D) was among the group who introduced HR 113 and HCR 153, which note that the Act, “disproportionately imposes an economic burden on and adversely affects Hawaii.” The resolution goes on to carve out the specifics of the limited exemption, taking care to refute the claim that the Jones Act is necessary to national defense or effective in protecting the US shipbuilding industry.

“This is a great day for both political cooperation and our economy,” stated Dr. Keli’i Akina, President of the Grassroot Institute of Hawaii. “The Grassroot Institute has long supported Jones Act reform, not only out of principle–for such protectionist legislation reduces our competitiveness and infringes on our liberty–but also out of simple compassion for Hawaii’s citizens and businesses. In cooperation with countless others, including Michael Hansen (President of the Hawaii Shippers Council and an advisor to Grassroot institute), Grassroot has worked hard to educate both legislators and the public on the need for Jones Act reform. The Jones Act is a burden on everyone who lives and works in Hawaii, acting as an invisible tax on every good that comes to our shores. A limited exemption, such as that envisioned by these resolutions, is a tremendous and positive step.”

Dr. Akina continued: “Moreover, we are happy to see that this is an issue that has gained bipartisan support. Not only was Speaker Souki one of the primary introducers, but he was joined by Reps. Ward (R), Brower (D), Cachola (D), Creagan (D), Evans (D) and Kobayashi (D). We also thank Senator Slom (R) for introducing SR 45 and SCR 93, the Senate versions. There should be no question of partisanship when it comes to improving the economy of our state, making it a better and more profitable place to do business and reducing the cost of living for our citizens. It is gratifying to see that this common sense issue is being treated with the gravity it deserves.”