Members of the University of Hawaii’s governing board want officials to come back with a more detailed and sustainable spending plan.
The Board of Regents’ Budget Committee, which typically rubber stamps the UH spending plan before sending it for approval by the full 11-member board, decided instead to defer the financial plan in a unanimous vote Thursday.
UH President David Lassner and university budget chief Kalbert Young agreed that the budget was incomplete, noting too many unknown factors like state-level support.
Officials will be expected to present a new budget at the regents’ next board meeting, scheduled for Sept. 17. In the current budget plan, the university system has operating expenses of about $981 million against expected revenues of $914 million.
Much of the regents’ concerns revolved around the budget’s reliance on spending some of the $300 million it holds in what’s essentially a rainy day fund to cover any budget holes this year.
Budget Committee Chair Jan Sullivan was also concerned with relying on tuition revenues, which are declining, to help pay for salaries that are usually paid for with state funds.
“In my mind, this budget is just playing a shell game with funds,” Sullivan said, adding that the budget doesn’t address “difficult discussions” like furloughs or reducing the workforce.
The budget projects that UH will have $138 million less in revenues than it did in 2020, when revenues topped $1 billion.
Two of the most significant factors contributing to the expected revenue decline include a $64 million drop in state funds, a $26 million drop in tuition revenues and a $36 million decrease in special fund revenues, which pay for things like the parking garage and athletics.
UH is projected to end the fiscal year June 30 with a $66 million deficit that would have to be covered almost entirely with rainy day savings.
That would deplete UH’s reserves to around $140 million after covering the deficit and other financial obligations like bond debt.
The board has a policy that savings must be enough to cover each UH campus for two months in the event other funds run out, according to Sullivan.
But projections show that only UH Hilo and UH West Oahu would meet that requirement under the current spending plan.
UH Manoa, left with a reserve balance of $51 million, would be about $19 million shy of its target. And the seven community colleges would be about $3 million short, with a balance of $26 million at the end of the fiscal year.
Board Chair Ben Kudo jumped in to grill Young on what the university is doing to lower monthly operating costs, estimated at about $75 million.
“That is what the administration is trying to manage,” Young said. “By and large, we are trying to triage our operations.”
The budget chief added that UH is trying to ensure they preserve the reserves as much as possible. The idea was to not allow campuses to spend more than half of their savings this year.
But Kudo also wanted to know at what point they’d be allowed to spend the funds.
“This is like the chipmunks,” Kudo said. “There’s good chipmunks and bad chipmunks in terms of saving acorns, and the ones that don’t have a lot of acorns for the winter, they’ll use them in a matter of weeks.”
Sullivan said the blame can’t be placed squarely on Young and Lassner’s shoulders.
“This is a bigger issue that campus leadership at all levels must face,” she said.
UH will be expected to cut $100 million worth of expenses over the next year and continue that throughout the coming years. A policy paper attached to the budget documents lays out plans for aligning a new spending plan with UH goals of helping to diversify Hawaii’s economy in areas like computer science, agriculture and green jobs.
Along with that may come an overhaul of UH programs in the coming years. Deans at UH Manoa have already begun re-examining their programs in light of any changes.
The Manoa athletics department — which hasn’t seen its budget in the black since Colt Brennan helped lead the undefeated 2008 Warrior football team to a Sugar Bowl appearance — may also undergo drastic changes.
Lassner said he’s convened a blue-ribbon commission to look into the department’s revenues and expenses.
The athletics department is facing another annual deficit, this time at $9 million.
In years past, those deficits have been covered by an infusion of money coming from other pockets of the Manoa budget.
Athletics Director Dave Matlin’s presentation was cut short due to time constraints, but Matlin said the program will pursue cost-saving measures over the next year.
Revenues for athletics are expected to decline $5.5 million over last year.
Matlin said a significant chunk of revenues comes from games played, which in turn brings money in from television, radio, concession and ticket sales. As an example, Matlin said 60% of ticket holders for volleyball games are asking for refunds, which UH plans to honor.
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