Officials have asked the state Legislature for additional subsidies through the school's start-up period.

The shortfall occurred because projections were not met that grants would fully pay for operations for the school's first year, officials said.

When University of Hawai'i administrators made the news public at a Board of Regents meeting yesterday, one regent expressed anger and dismay that there wasn't a better financial plan in place.

"We were sold the fast-tracking of this building and no one seems to have planned for the operation of it," said regent Kitty Lagareta. "Here we are and we have this building and we don't have some of the planning in place. I don't want this to be a Kapolei Library (which opened without enough money to buy sufficient books)."

University of Hawai'i administrators have been taking a hard look at the numbers over the past few months only to conclude that money that was expected from grants to pay for operations won't be enough in the first few years.

But they also are careful to point out that any operation of this magnitude takes time to be running well and often needs extra help in the start-up period.

"This is a risky venture," said Interim UH President David McClain. "It can have big payoffs for the state, but you have to watch the financing. But the economy is strong as an ox now and legislators have expressed their support."

The university is asking the Legislature for $2.6 million for the new school in Kaka'ako for the first year of the new biennium budget and another $4.4 million for the second. Even if lawmakers finance the request for 2006, another $3.5 million has to be found somewhere.

"There is some red ink," said McClain. "If we take the education building off the books, that goes away. However, finding that money is a challenge."

Traditionally the cost of operations for each of the colleges and departments and buildings in the campus system are paid through a central university fund.

But in this case, Medical School Dean Ed Cadman has said grants would pay for the operation of the new school.

Each federal grant brings with it an amount that pays for overhead costs such as the electrical bill. How much of the grant can go toward operating costs depends on the quality of a campus' infrastructure.

Currently, UH has a rate of under 40 percent but the administration hopes it will go to 50 percent.

McClain and his staff are looking at a number of options. But he is hesitant to pull back on hiring additional faculty for the first year, and so are regents.

"You can save money by stopping hiring, but it's going to affect you down the road," he said. That's because "Under an aggressive program of hiring, the theory is that you have great people and they pay for themselves over time. But the indirect cost rate is not up."

Said regent Alvin Tanaka: "We have to come up with the money."

Another option is raising tuition, since students now pay about 30 percent of the cost of their medical school education.

He also is looking at moving around other money coming into the university from indirect costs paid by other grants.

The medical school has had a rocky past. Former president Kenneth Mortimer began charting its current course in 1999, said McClain, when he determined that the school could turn a teaching institution into a research facility to create an economic engine for the state.

After 2001, the school was fast-tracked as a pump-priming device for the state economy to provide jobs and potential new revenue, said McClain.

What couldn't have been anticipated was the war in Iraq and how it would affect spending by such agencies as the National Institutes for Health, from which UH has been seeking grants. Its support is projected to flatten out in the next few years.