Gov. Linda Lingle's plan to cut the University of Hawai'i and the state Department of Education budgets was upheld in court yesterday, and education officials say they will negotiate with unions on how to make the reductions.

Last month, Lingle told state workers they would have to take three unpaid days off per month, but the plan did not include UH and public school employees because they are governed by independent boards. Instead, Lingle said she would cut the UH and DOE budgets by the equivalent of three furlough days a month.

Circuit Judge Karl Sakamoto yesterday ruled that Lingle does have the authority to cut their budgets.

The cuts the governor has ordered amount to about $106 million for UH and $270 million for public schools over the next two years.

University of Hawai'i President David McClain and Superintendent of Schools Patricia Hamamoto have said they intended to negotiate cost-saving options, which may include furloughs, with labor unions.

"We will pursue negotiations with the labor unions," said Sandra Goya, spokeswoman for the state Department of Education. "If the department is unable to proceed with furloughs, other labor cost saving measures will need to be quickly identified and implemented systemwide."

Goya could not specify what other options may be available. However, Hamamoto previously proposed a 5 percent across-the-board cut to school-level programs and a reduction in part-time workers.

Meanwhile, UH officials say they intend to move forward on negotiating pay cuts with the faculty union, the University of Hawaii Professional Assembly.

"We have been negotiating with them," said Carolyn Tanaka, a UH spokeswoman. "Now we know that furloughs need to be bargained and obviously wage reductions need to be bargained."

FOCUS ON UH SALARIES

Based on cuts made by the state Legislature, Lingle's budget restrictions and federal stimulus funds, UH's 10-campus system faces reductions of about $76 million from its annual $470 million budget next year. UH also expects $79 million in cuts in fiscal year 2011.

In a statement to the university on Wednesday night, McClain said the university is discussing terms of a new contract with UHPA, which represents more than 3,000 faculty members.

Last year, UHPA members received an 11 percent pay increase under their existing contract, which expired June 30.

"We're pleased that we've been able to elevate the competitiveness of our faculty's compensation, but we now believe that the economic situation and budget realities call for some downward adjustment for the next couple of years," McClain said.

McClain also said he'd seek pay cuts for administrators and executives within the system.

"Frankly, we would prefer to achieve these savings through the collective bargaining process, and we hope we will be able to do so," he said.

If furloughs were sought at UH, McClain said they would likely be taken from paid holidays — the winter break between semesters, the spring break and the Friday after Thanksgiving. Taken together, 13 furlough days would amount to a 5 percent reduction in compensation and would save the university more than $23 million per year.

The Department of Education is also looking at major budget reductions.

Once cuts made by the state Legislature and Lingle are offset by some $111 million in federal stimulus money, DOE expects a $226.8 million reduction from its $1.8 billion budget. About $241.7 million in cuts are for the 2010-11 school year.

Several weeks ago, Hamamoto presented state Board of Education members with a proposal to address the cuts through potential furloughs of teachers and staff, a 5 percent across-the-board cut to school-level programs and a reduction in part-time workers.

DOE budget officials also suggested slicing the so-called Weighted Student Formula, the department's method of allocating money to schools, by some $8 million.

TEACHERS' 'FAIR SHARE'

Goya said the education department intends to move forward with negotiations for furloughs.

Roger Takabayashi, president of the Hawaii State Teachers Association, said the union has already contacted a federal mediator to schedule negotiations on potential furloughs or other concessions.

"We are willing to negotiate, and we will negotiate. We've always been saying that we understand the state's economic status," Takabayashi said.

Takabayashi would not say whether he expects there to be pay cuts for teachers, but he said union members are willing to take their "fair share."

"At the same time, we need to take into account that there is money laying around," he said. "There's money in the Hurricane Relief Fund, the Rainy Day Fund. It's quite unfortunate that the majority of the burden is placed on the backs of public workers."

Last week, Board of Education Chairman Garrett Toguchi said the board sent a letter to state Senate President Colleen Hanabusa and House Speaker Calvin Say urging them to convene a special session of the Legislature to consider use of the Hurricane Relief Fund or an increase in the general excise tax to plug the state budget deficit, subsequently sparing education from drastic cuts.