Getting UH-Manoa facilities back on track
By David McClain
How did the University of Hawai'i get so far behind on repair and maintenance? Judging from the letters to the editor and op-ed pieces I reviewed after a week off-island, there isn't a lot of clarity out there on this issue.
One reader wondered why the Board of Regents hasn't raised tuition to generate more revenues (as explained below, they have). An op-ed author suggested that the Legislature would have done more, but it needed to respect the university's autonomy (you can draw your own conclusion on that after finishing this article).
For the record here are answers to several frequently-asked questions on the subject.
Q: What started the problem?
A: During the six-year economic recession in Hawai'i in the mid- to late-1990s, the university's general (state) funds operating budget was reduced by the Legislature by some 25 percent — about $90 million — abrogating a 1995 commitment made to hold funding constant. Capital renewal and deferred maintenance funded by general obligation bonds averaged only about $12 million per year between 1995 and 2000, hardly enough in a system that needed $30 million to $60 million per year just to stay even.
Q: Couldn't the regents raise tuition to offset the loss in general funds?
A: After 1995, the university was permitted to retain its tuition, and the regents did double it between 1995 and 2000, to $3,000 per academic year for resident undergraduates attending the Manoa campus. Given the low starting level, however, this generated just $35 million in new revenues, not nearly enough to offset the $90 million loss in general funds. On the higher tuition base, a 3 percent per year hike from 2001 through 2006 produced another $30 million in new funds.
Q: OK. But since 2000, UH has been autonomous by constitutional amendment, at least to some degree. Why didn't the regents boost tuition by more?
A: Recently they have. In 2005, recognizing the need for the university to generate revenue from tuition at the same rate as its peers, I proposed and the regents supported a five-year, $816 per year resident tuition increase from fall 2006 at UH-Manoa — and similar increases at our other nine campuses — so that by 2012 UH tuition levels would be average.
These increases — averaging about 16 percent per year over six years, or 140 percent in total, compounded — will bring in more than $90 million in new revenue by 2011. What's more, thanks to our earmarking a quarter of the tuition hike for extra scholarship assistance, enrollment has actually risen slightly; systemwide, 50,454 students are attending in the fall of 2007, as compared with 50,157 students enrolled in the fall of 2005, before these substantial tuition hikes went into effect.
These new tuition funds are sorely needed, because UH's general funds allotment from the Legislature didn't reach 1995 levels again until 2006 — and in those 11 years higher education salary and other costs surged more than 40 percent nationally.
Q. What about expenditure priorities? Why haven't you and the regents recognized the repair and maintenance problem, and put this first?
A. Again, we have. Since I became president in mid-2004, the university's capital improvements budget approved by the Board of Regents has consistently put as its highest priority health and safety and capital renewal and deferred maintenance. In two biennium budgets and one supplemental budget in between, the regents asked the governor and the Legislature to support more than $300 million in general-obligation bonds to address this priority; the Legislature has approved some $147 million of our requests. At the same time, the Legislature has chosen to fund $276 million in lower priority items. If we were truly autonomous and budgeted on a lump sum basis, all $300 million of our capital renewal priority would have been funded, making our R&M backlog $150 million less.
Our current supplemental budget request leads with $99 million in bond authority for health and safety and capital renewal and deferred maintenance items. This year, with all the attention paid to UH facilities, we hope to receive the entire total.
Q. Is it all about money?
A. No. Experts from other universities who visited the Manoa campus in 2006 found a striking lack of leadership in the facilities operation there. In 2007, changes were made, and UH-Manoa's facilities group, now headed by David Hafner, is moving aggressively to identify and remedy problems, with a goal, as Chancellor Virginia Hinshaw puts it, of removing the tarnish from the jewel that is Manoa. Moreover, starting March 1, Brian Minaai will join the UH system as associate vice president for capital improvements, bringing more than 20 years experience in private real estate development and 10 years in the public sector.
Q. What about UH's exemption from the state procurement code? Surely this helps cut costs and provides a better return on monies spent on facilities.
A. Our exemption, granted with constitutional autonomy in 2000, was revoked by the Legislature in 2004. For the fourth straight year, our legislative package is headed by our request that our procurement exemption be restored.
The regents and I are committed to supporting the efforts of all 10 of our chancellors to provide their students with stimulating educational programs in safe, inviting, energy-efficient and technologically current facilities. With the backing of the governor and our elected legislators, two-thirds of whom I'm proud to say are UH alumni — and only one-third of whom were in the Legislature in the dog days of the 1990s — we can and must reverse the 1995-2005 decade of decay.
David McClain is president of the 10-campus University of Hawai'i System. This essay has been adapted from remarks made recently to the Business Roundtable, for The Advertiser.