The University of Hawaii Cancer Center is projecting a balanced budget this year for the first time since opening its $130 million Kakaako facility in 2013.

The center has been running a $7 million annual deficit, which dropped to $2 million in fiscal 2017 after cutting expenditures through attrition and operational efficiencies, gaining $2 million from UH-Manoa for faculty salaries and another $2 million from Gov. David Ige’s budget, said Dr. Randall Holcombe, director of the cancer center, which released its annual financial report Nov. 1.

“We’ve been very careful to run an efficient operation and cut expenditures by over half a million dollars a year out of our operating budget,” Holcombe said. “With all those things together, we think we’re going to have a balanced budget this year.”

Earlier this year, the university was denied a recurring $5 million annual appropriation by the Legislature to help sustain operations at the research center. The main source of income for the center — cigarette tax revenue — has dropped significantly in recent years, to $14 million from $19 million. The center had been using a faulty business plan that assumed its cigarette tax income would remain constant, but tax revenue has dropped as fewer people smoke.

“They’re going to have to prove they can be sustainable. That $2 million appropriation has to be treated as a stop-gap item, so they’re going to have to show down the road that they’re going to have streams of revenue to replace it,” said Rep. Angus McKelvey (D, West Maui), chairman of the House Higher Education Committee. “(This) underscores the message of fiscal responsibility needed for the cancer center.”

UH officials have agreed to continue the $2 million support of the center’s faculty salaries in the future, but the direct support the governor provided in fiscal 2017 and 2018 may change with a new administration.

However, clearing the deficit this year allows the center to “focus on its mission of reducing the burden of cancer” for the more than 6,000 people in the state diagnosed each year and comes at a critical time as the research facility seeks to renew its National Cancer Institute designation, which gives it an edge when competing for the more than $20 million it brings in annually in federal research grants.

Designation crucial

Maintaining the designation is “critical to support the research efforts, retain current faculty, recruit new faculty and support the cancer center’s mission,” the center said in its most recent financial report.

The NCI designation is renewed every five years in a competitive process. The center must demonstrate quality and depth of research, outreach and education. NCI officials are scheduled to conduct a site visit in January and make a decision in June on whether to continue federal support grants of about $11 million. The designation also opens the way for additional grant funding available only to the 69 U.S. centers with the designation.

“I think we put in a successful application. We’re very unique. The center focuses on cancer problems in Hawaii and across the Pacific,” Holcombe said. “Part of our mission is to focus on the ethnic diversity of our population and how that affects incidence and outcomes related to cancer treatment. We have lots of unique attributes not duplicated by any other NCI-designated centers.”

The state has made strides in decreasing certain types of cancers.

Hawaii’s colon cancer rates dropped 1.5 percent over last decade, while lung cancer has declined 2.3 percent. However, liver cancers rose 2.1 percent, while kidney cancers climbed 2.4 percent and thyroid cancers jumped 6.5 percent.

“The reasons for that are not clear, but we’re trying to sort out why. We do have a higher rate of cancer than the rest of the U.S. (including breast, colon, liver, stomach and pancreas cancers),” he said. “We have specific populations that do much worse from a survival point of view. Most of the major cancers affect the Native Hawaiian population more significantly, so we have lots of programs designed for outreach into the Native Hawaiian community to try to address that.”

Research goals expand

The center is working to expand research focused on ethnic diversity and cancer through philanthropic and grant funding. In 2017, the center applied for grants totaling $175 million — a 20 percent increase from 2016 — and has so far been awarded $36 million. The remainder is pending decisions.

Over the past five years, 12,450 patients were enrolled in local clinical trials with an emphasis on those relevant to Native Hawaiians and other ethnic groups with cancer health disparities.

In 2016, more than 75 percent of enrollees were nonwhites, with Native Hawaiians accounting for 17 percent of treatment trials and 72 percent of other prevention, diagnosis and screening programs. Nationally, more than 95 percent of clinical trial participants are white. So far this year, roughly 1,000 patients have been enrolled in trials.

Manoa resident Dawn Kobayashi, 57, participated in a clinical trial for colon cancer in 2005 through the research center.

“It basically saved my life and it increased my level of care for the cancer treatment. I was able to get treatment at home in Hawaii. Honestly if I had to go to the mainland, I don’t think I would participate in a clinical trial,” she said. “As a cancer patient, you’re just thrown this curveball and you’re not thinking about other options, so it’s important that patients be advocates for themselves. It’s important that people know the options that are available to them because those options could save their lives.”

The center, which opened in 2013, is also hoping to eventually produce revenue from 36,000 square feet of unused space attached to its building.

“There’s no AC, plumbing, electrical or internal walls so it’s not usable at the moment. We would love to build out that shell,” said Holcombe, adding that the facility has contracted with the Department of Architecture to develop plans for using that space for clinical trials, a biotech incubator and more lab space to recruit additional faculty.

But that would cost about $24 million.

“I don’t have $24 million … but we’re working with the development office and UH Foundation to see if we can generate philanthropic support that would help build out that space. It’s high on our list we want to do,” he said. “Opening new space also has a huge economic impact for the local area.”

The center is also actively filing patents and working to create spin-off companies and products that it might be able to license to generate revenue, he said.

“There’s no way we’re going to run a $7 million deficit again,” Holcombe said.