A scheduled tuition hike that University of Hawaii officials had hoped to forgo in the fall is back in play as the university looks to make up $28 million that lawmakers left out of the state budget for university operations in the upcoming fiscal year.
But UH’s chief financial officer says it’s "nearly guaranteed" a tuition increase will be smaller than the 7 percent hike approved in 2011 as part of a five-year tuition schedule.
"We are actually contemplating asking for that rate of increase to be mitigated, so reduced, not 7 percent," Kalbert Young, CFO and vice president for budget and finance, told the Honolulu Star-Advertiser.
"That would mean additional cost containment measures and whatever tuition is increased would go toward closing that $28 million gap," Young said. "We’re trying to stay away from program eliminations."
Young said the administration is still deciding what rate to recommend to the Board of Regents, but said the UH-Hilo and West Oahu campuses and the community colleges anticipate being able to manage an increase below the scheduled 7 percent.
The flagship Manoa campus, however, would need to make major cost reductions if the 7 percent increase doesn’t take effect.
Tuition this year at the UH-Manoa campus is $4,920 per semester, or $9,840 annually, for full-time residents. It would increase to $10,584 a year under the scheduled increase.
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SAVINGS, PLUS MORE REVENUE
Lawmakers approved only a fraction of the state funding the University of Hawaii sought for operations next year, creating a multimillion-dollar budget gap the university expects to plug with a mix of cost reductions and increased tuition revenue from a scheduled tuition increase.
$35.5M
Funds UH requested from the Legislature
$7.5M
Funds approved by the Legislature
$28M
Funding gap
FILLING THE GAP A 7 percent tuition increase regents approved in 2011 would generate an extra $30 million next year, but the administration hopes to avoid raising tuition by the full amount at most campuses.
While UH-Hilo, West Oahu and the community colleges can manage with tuition increases below the 7 percent rate, Manoa will need to find ways to save money.
>> Manoa already has to reduce expenses by $18.6 million for fiscal 2016 to avoid depleting reserves.
>> Without a 7 percent tuition rate increase, Manoa would need to reduce expenditures by another $12.9 million.
Source: University of Hawaii
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An anticipated drop in enrollment coupled with declining reserve funds would exacerbate the impact of a reduced tuition hike at Manoa.
The campus already has been tasked with reducing expenditures for next year by $18.6 million. Without a 7 percent tuition hike, Manoa would need to further reduce costs by $12.9 million, according to a presentation Young is scheduled to make Tuesday at a Board of Regents budget committee meeting.
With 76 percent of Manoa’s state and tuition funds covering payroll costs for mostly unionized employees, cutting personnel would be a challenge, according to the report.
The university had requested $35.5 million over current funding levels from the Legislature to help cover electricity costs, assist the struggling athletics program and ensure compliance with federal mandates over gender violence and discrimination systemwide.
The budget lawmakers approved this week includes $7.5 million of that request:
» $1,139,182 for compliance with federal mandates under Title IX, which bars sex-based discrimination in educational programs, and the Violence Against Women Act.
» $6,360,818 in lump sum funding.
Young, former budget director for the state, called the appropriations "conservative" — an approach he can appreciate.
"Although the actual money results may not be noticeable immediately, I think people who have seen the activity at the Legislature would probably conclude that the university got better treatment this year — qualitatively, maybe not quantitatively," he said. "I’m hoping that the university will continue to demonstrate that it’s an organization that’s well managed and that investments from the private sector, from taxpayer dollars, from the Legislature is going to be prudently and efficiently expended."
Overall, lawmakers agreed to provide approximately $427.6 million in general funds for UH. That’s 4 percent, higher than the $409 million appropriated for the current fiscal year. (With all sources of funding included, UH is about a $1.3 billion operation.)
But, Young said, besides the $7.5 million, the rest of the year-over-year increase is for collective-bargaining increases tied to existing labor contracts.
"It is fair to say that — but for the lump sum funding — the university did not get anything above the current base budget," he said.
On the capital improvements side, UH had requested $200 million in general obligation bond financing for an aggressive plan to start tackling its growing deferred maintenance backlog.
The state budget bill authorizes $54 million in bonds for deferred maintenance, below the estimated $60 million to $80 million the university needs annually for basic facilities upkeep.
Anticipating it might scale back the tuition hikes built into the final two years of the existing tuition schedule, the Board of Regents in October revised its tuition-setting policy to enable the board to lower tuition more quickly.
Previous rules required that any increase or decrease in tuition be presented at a public meeting at least one semester in advance. The regents now have the ability to drop tuition during a public board meeting at any time.
