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The University of Hawaii is projecting a $28 million deficit for the current fiscal year due partly to work that will merely limit the growth in an $848 million maintenance backlog.
The statewide system would cover the projected deficit spending out of its reserves, which could have an ending balance of $235.3 million.
The UH Board of Regents unanimously approved a $1.1 billion spending plan Thursday morning for the 2019 fiscal year that began July 1. Over $35 million of that spending plan will be for maintenance.
But that won’t reduce the $848 million maintenance backlog that UH has accrued; it’ll just limit its growth, UH budget chief Kalbert Young told Civil Beat.
In fact, UH would actually have to spend about $95 million each year to keep its maintenance backlog from growing, said Simeon Acoba, one of the 15 regents.
UH has seen declining enrollment since 2012, although that is expected to level out.
While systemwide enrollment is down, UH West Oahu is trending up. The flagship Manoa may see its largest freshman class ever, UH President David Lassner said Thursday. However, enrollment figures will not be released until September.
Enrollment was about 81,716 in 2015. That dropped to 75,020 last year.
Young said the deficit could be significantly smaller than the $28 million projected in budget documents should UH see an uptick in enrollment and other revenue sources, which it is hoping for.
He also said the projected deficit is so high because UH is supposed to budget conservatively.
“I don’t want to say its a worst-case scenario, but we want campuses to identify risk factors and how those affect spending,” Young said.
For example, UH Hilo is projecting a 6 percent decrease in enrollment this year because of the Kilauea eruption.
Though this is the highest projected deficit in the past four years, Young said the system is on a path to better financial health.
Still, the new budget projects a $20 million revenue increase systemwide, nearly a 2 percent hike. Student fees would account for $2.2 million of that.
In 2016, the regents approved a 2 percent tuition hike for the 2018-2019 school year for Manoa and community college students in lower division classes. Students at UH Hilo, West Oahu and upper division classes at community colleges will see a 1 percent tuition increase.
State Sen. Kai Kahele introduced a bill during the last legislative session that would have frozen tuition and linked it with the state median for household income. Senate Bill 2329 died in a committee.
The Athletics Department is projecting a $4.3 million deficit, over $1 million more than last year. The department, which has run deficits for at least the past three years, lost $596,000 in revenue compared to the last fiscal year while being required to spend about $765,000 more for travel and football, among other costs.
The Manoa campus will spend about $29 million this fiscal year on what Young calls one-time maintenance expenses.
Most of that will be for renovation and refurbishment for faculty and student housing. Hale Aloha, Ilima and Lehua need boiler replacements, and Hale Aloha is also getting some air conditioning replacements, according to budget documents.
About $3.1 million will be spent on railing and fire alarm replacements alone. The Campus Center will get about $12.7 million worth of modernization upgrades.
The UH system’s seven community colleges will share about $4.5 million for maintenance and repairs at their campuses, the three largest of which are on Oahu.
UH Hilo will need to spend about $2 million for repairs to its buildings.
Total payroll expenses for UH employees systemwide is expected to go up by about $20.5 million due to collective bargaining increases, according to the budget documents.
The regents also unanimously approved a budget request for 2020 and 2021 to cover capital improvement projects.
Lawmakers approved about 38 percent of UH’s last capital improvements budget request, said Jan Gouveia, vice president for administration.
The capital improvement funding request still needs to be transferred to the governor’s office before going to the Legislature next session.
UH requested $216.6 million for 2018 and $269.7 million for 2019. It got about $279 million total for those years. The new request will be for $295 million in 2020 and $319.5 million in 2021.
Projects that UH could complete if it gets full funding include:
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