This was a tough year at the Legislature for the University of Hawaii.

The 10-campus university system will have to put some capital improvement projects on hold, rely on fewer faculty and use more tuition dollars to pay salaries, UH President M.R.C. Greenwood told Civil Beat in a private meeting Wednesday. Hardest hit could be the medical school, which lost $4 million, or 17-18 percent of the state’s contribution to its operations.

“It’s a serious blow. A very serious blow for us. It’s going to force some changes at the medical school that we’re not going to be very happy with,” Greenwood said.

The budget discussion came as part of a sweeping conversation about the importance of the university system. The $1.4 billion public institution is Hawaii’s third largest employer and its success is inextricably linked to the success of the state and its economy, she said.

Greenwood pointed with pride to the sweep of the system, from community college to research campuses, spread across the islands, describing it as a source of hope for many in Hawaii. She was realistic about the budget challenges and spoke with pride about the initiatives the university is taking with regards to distance learning and other efficiencies, as well as the depth of its scholarship.

The financial reality this year at the Capitol was that legislators ran out of time to approve a $100 million revenue bond that would have paid for at least a dozen capital improvement projects for the university system.

The finalized state budget also did not include the $12 million UH requested to help restore professors’ salaries to pre-recession levels. Faculty had taken a pay cut to help the university weather the economic storm.

And beginning in July, the school of medicine will lose $4 million a year from the state’s tobacco settlement.

These financial disappointments compounded others from recent years, Greenwood said. Although she plans to protect faculty salaries, other areas will suffer.

“Public education has descended from being one of the high-priority public issues,” she said. “We are now competing with necessary services, and unfortunately we are a part of the discretionary budget. Our general fund budget was cut 25 percent two years ago, we were nicked again last year and then again this year.”

UH managed the initial shortfall in three ways, Greenwood said:

  1. Reducing salaries for most employees.
  2. Using tuition money to help cover the existing payroll.
  3. Engaging in a number of “efficiencies,” which included re-evaluating a number of programs and leaving many positions unfilled after faculty members retired. That resulted in some salary and position savings.

The money from the revenue bond would have created construction jobs in the community. It also would have saved the university money, because construction costs are lower than they have been in recent years. But lawmakers couldn’t finalize the bill before a 6 p.m. deadline Friday. The building projects will have to wait another year.

The $4 million loss to the John A. Burns School of Medicine is significant. The tobacco settlement distribution was originally scheduled to expire in July, but the school had high hopes for an extension. Its request failed in the eleventh hour. That came as a particular shock, Greenwood said, because the House and Senate had both reached an agreement on a bill, but it was never released for a final floor vote.

“Losing that, and losing it so suddenly is unexpected and is probably going to be extremely difficult for the medical school,” she said.

In February, medical school spokeswoman Tina Shelton said the loss could cause tuition rates to double for in-state students, from $27,000 to $58,000 per year. Greenwood said Wednesday that it’s too early to say how exactly the school will absorb the impact.

To be sure, the university didn’t walk away from the Legislature empty-handed. Lawmakers approved $174 million for capital improvements over the next two years.

But Greenwood doesn’t anticipate the current funding crisis to end anytime soon, which has prompted a holistic reevaluation of how the university saves and spends its money.

Given the university system’s current financial situation, Greenwood said it will have to take additional steps to save money:

  1. Look “ever more closely” at eliminating duplication.
  2. Be even more careful about re-hiring faculty and filling positions.
  3. Reconsider the system’s approach to and use of tuition.

Faculty Salaries

One cost-saving measure that is not on the table, she said, is reducing faculty salaries again. Even though times are tough, she said, the university must be competitive when trying to attract national and international scholars who can help advance research and innovation in the state.

At UH Manoa, the system’s flagship campus, Greenwood said, 100 percent of general funds go toward payroll, and that only covers about 60 percent of the total salary costs for the campus. About one-third of Manoa’s tuition revenue covers another 16 percent of payroll costs.

Greenwood said the university will afford to make professors’ salaries competitive through internal savings like reducing their number through attrition and relying on more temporary, non-tenure-track hires; raising more external support through fundraising and research grants; and using some tuition money.

The university isn’t just looking to the Legislature to solve its financial woes. She discussed efforts to grow research dollars — already at $450 million — and how the university is in the silent phase of a major fundraising campaign to attract private dollars to help strengthen the state’s only public system.

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