A court-appointed official recommended a 69 percent pay increase for Kamehameha Schools' trustees just as the estate's endowment declined by more than $1.7 billion.

David Fairbanks, the trust's Probate Court appointed master, recommended the maximum pay for most board members go from $97,500 a year to $165,000. The pay raise would be the first in about a decade for the five board members.

A compensation committee had recommended $187,000 a year for most board members. But Fairbanks said he trimmed it by $22,000 because of the recession.

"It could well give the wrong message to the community and be construed as insensitive and somehow marking the KS Trustees (as) immune to the difficult economic times being faced by everyone else in the community," Fairbanks said.

The master's report on salaries was filed in state Probate Court on Thursday, a day before the trust disclosed that the value of its endowment plunged from $9.4 billion to $7.7 billion between July and October.

The decline reversed a stellar 2008 fiscal year when the trust's endowment increased by $367.9 million.

A Kamehameha Schools spokeswoman declined comment until Probate Judge Colleen Hirai reviews the matter. A hearing on the salaries is scheduled for Friday.

In his report, Fairbanks said trustees are entitled to a raise given the amount of time required for the position and the complexities of setting policy for a multibillion-dollar estate.

Kamehameha Schools trustees spend about 2 1/2 to three days a week working for the estate, according to a study by an outside expert, San Francisco-based Mercer LLC. The study was used by the compensation committee to make its recommendation. The study said the Kamehameha Schools trustees spend more than twice as much time on trust matters as the boards of comparable nonprofit organizations and for-profit corporations.

The Probate Court appointed a trustee compensation committee whose members included Kamehameha Schools alumnus Michael Rawlins, insurance executive Douglas Goto and attorney Rosanne Goo. They recommended trustees' maximum pay increase from $97,500 a year to $187,000 a year.

The committee also recommended that the maximum compensation for the board chair be increased from $120,000 a year to $217,500 a year.

Fairbanks' recommendation, if adopted, would increase the maximum pay for Kamehameha Schools board members Diane Plotts, Corbett Kalama and Doug Ing from $97,500 a year to $165,000 a year. Chairman Nainoa Thompson's maximum pay could increase from $120,000 a year to $207,000 a year under Fairbanks' proposal. One other trustee, retired Adm, Robert Kihune, wouldn't be entitled to the full increase because he will retire in June.

Kamehameha Schools, which was established by the 1883 will of Princess Bernice Pauahi Bishop, is a nonprofit trust that educates Hawaiian children. It is one of the nation's largest charities and is Hawai'i's largest private landowner with more than 360,000 acres.

For decades, the issue of trustee compensation has been one of the biggest controversies surrounding the estate.

During the late 1990s, the Internal Revenue Service threatened to revoke the trust's tax-exempt status due in part to the $1 million a year paid to then-board members Richard "Dickie" Wong, Henry Peters, Lokelani Lindsey, Gerard Jervis and Oswald Stender.

The IRS later settled with the estate after board members resigned and the trust reformed its governance and pay policies.

The trustee compensation committee was set up in the aftermath of the controversy to cap trustee pay at "reasonable" levels."

In 2004, the committee recommended increasing the maximum pay for a trustee by more than 70 percent to as much as $180,000 for regular board members and $210,000 for the board's chair.

The probate judge approved most of the increase but all five trustees agreed to turn down the raise.