Kamehameha Schools

A $14.7 billion endowment behind a K-12 school system

Every first-page result describes Kamehameha Schools as a private Hawaiian school system founded by a princess’s will. Almost none explain how extraordinary its economics are: as of June 30, 2021, the Bernice Pauahi Bishop Estate held a $14.7 billion endowment — $10.7 billion in globally diversified financial assets plus $4 billion in Hawai’i commercial real estate — and 98% of the schools’ educational mission is funded by endowment returns, with only 2% coming from tuition ¹. The trust manages its endowment against a 4% annual spend rate (3.8% over the five years to 2021); in that fiscal year it spent $438 million on education, serving 6,857 learners across its campuses and 29 preschool sites, disbursing $28.2 million in scholarships and $27.4 million in financial aid ¹.

A princess’s will

Kamehameha Schools exists because of Ke Ali’i Bernice Pauahi Pākī Bishop, born in Honolulu on December 19, 1831 — the great-granddaughter of Kamehameha I and the last royal descendant of his line ². She married banker Charles Reed Bishop in 1850, and in 1883 set down her final will directing that her private estate be used to educate Native Hawaiians, having watched the Hawaiian population, language, and culture decline ². When she died childless on October 16, 1884, more than 375,000 acres — nearly nine percent of Hawai’i’s acreage — were dedicated to establish the schools; her estate was itself a collection of the estates of other ali’i, including lands of Kamehameha V, King Lunalilo, her father Abner Pākī, and others ². The first school opened in 1887; the boys’ and girls’ schools merged into one coeducational institution in 1965 ². Admissions preference goes to applicants of Hawaiian ancestry, as the school states, “to the extent permitted by law” ². Today it runs K-12 campuses at Kapālama (O’ahu), Pukalani (Maui), and Kea’au (Hawai’i), plus preschools statewide ².

Where the money came from

For most of its history the estate was land-rich and cash-poor. That changed in the early 1980s, when the U.S. Supreme Court upheld a Hawai’i law forcing the trust to sell off land to homeowners who had leased it for years — generating an enormous cash windfall for investment ³. By the late 1990s the trust owned about 8% of the land in Hawai’i with investments “from China to Wall Street,” worth over $6 billion total ³. Just days before the scandal described below peaked, the estate’s 10% stake in the investment partnership Goldman Sachs converted into $600 million at its 1999 IPO ³.

The “Broken Trust” scandal

In August 1997, the Honolulu Star-Bulletin published “Broken Trust,” a manifesto by five distinguished Hawaiian elders — including senior federal judge Samuel P. King and University of Hawai’i law professor Randall Roth — alleging that the five trustees were mismanaging the estate and enriching themselves ³. Governor Benjamin Cayetano ordered Attorney General Margery Bronster to investigate. After the IRS threatened to revoke the trust’s tax-exempt status, a probate court judge in May 1999 ordered the ouster of four of the five trustees and accepted the resignation of the fifth ³. Each trustee had been paid about $1 million a year ³. The estate’s will had stipulated that trustees be chosen by the state Supreme Court’s justices — a practice that had funneled politically connected insiders, including a former state House speaker and a former Senate president, onto the board; after the scandal, the justices abandoned the selection role ³.

A professional era

The modern Kamehameha Schools is run as a professional institution — Dee Jay Mailer, a healthcare executive who had led Kaiser Permanente Hawai’i and the Geneva operations of the Global Fund, served as its CEO from 2004 to 2014 ². The trust holds 363,194 acres, of which 65% is agricultural and 32% conservation land treated as sustainability assets outside the endowment; the endowment’s ten-year average return to 2021 was 8.8% ¹.

What this profile does not claim

• The profile does not state a current (2026) endowment figure; the latest verified figure is the school’s own $14.7 billion as of June 30, 2021 ¹.
• It does not detail the post-1999 trustee selection process, which was not verified in the sources read.
• The $600 million Goldman Sachs figure is attributed to the New York Times; the trust’s own account of that holding was not read ³.

Footnotes

1. Kamehameha Schools, “Report on Financial Activities: July 1, 2020 – June 30, 2021”: $14.7B endowment; $10.7B + $4B split; 98%/2% funding; $438M spend; 6,857 learners; 29 preschool sites; $28.2M scholarships; $27.4M aid; 363,194 acres; 8.8% ten-year return; 3.8% spend rate. ↩ ↩² ↩³ ↩⁴

2. Kamehameha Schools, “Ola Pauahi, Ola Hawai’i”: birth 1831; great-granddaughter of Kamehameha I; married 1850; will 1883; died 16 Oct 1884; 375,000+ acres, ~9% of Hawai’i; ali’i estates; first school 1887; 1965 merger; admissions preference; three campuses. Dee Jay Mailer’s Kamehameha tenure is recorded in this site’s existing profile. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷

3. The New York Times (Todd S. Purdum, 15 May 1999): 1999 ouster; IRS threat; $1M/year pay; $6B+, 8% of land; Broken Trust essay; Cayetano/Bronster investigation; SCOTUS windfall; Goldman Sachs $600M; trustee selection. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸