A $1 million hike in coaching salaries and performance bonuses contributed to a $2.94 million net deficit by the University of Hawaii athletic department, according to an independent auditor’s report.

This latest deficit, reflecting the fiscal year that ended June 30, has required the athletic department to increase its borrowing from the university to $13.6 million to balance its accounts, the Board of Regents Committee on Independent Audit was told on Thursday.

“The financial condition of the Athletics Dept. continues to be fragile due to the ongoing struggle to generate operating and fundraising revenues, while continuing to manage operating expenses,” the report read. “These conditions will likely necessitate future recurring institutional support in order to sustain the athletics department.”

NCAA studies have shown the vast minority of athletic programs — often fewer than 25 of the 130 schools that compete on the Football Bowl Subdivision level with UH — pay for themselves.

Some regents have questioned whether the department, which has had two years in the black since 2001, can return to the self-sufficiency of the 1980s and ’90s.

In a written response to the audit report, the athletic department said, “If our goal is to get to a balanced financial model, in addition to the continued efforts of the department to maximize revenues and control expenses, we will need additional support from the university, the Legislature and other external entities.”

Last session the Legislature appropriated $4 million ($3.6 million for Manoa and $400,000 for UH Hilo) for the current fiscal year, which ends June 30.

The audit report noted, “coaching salaries paid by the department increased by approximately $1,043,000 in comparison to fiscal 2018. The increase was primarily attributable to increases in base salaries and performance bonuses.”

The department paid $8.5 million in coaching salaries for FY 2019, its third-highest outlay of $51.3 million in expenses.

The athletic department also said its financial situation is impacted by a “low” level of student fee support, $6.2 million in “unique” travel costs and other expenses due to geography and increasing labor benefit costs.

Committee chairman Michael McEnerney noted that UH is required to cover travel expenses for conference opponents coming here and said, “So, (the deficit) is one of these almost-impossible things to break. This is a fact of life. And, thank goodness the (UH) system has decided it is important to support athletics, not just football.”

UH BALANCE SHEET

UH Athletic Department budget

2019: -$2.9 mil.

2018: -$1.9 mil.

2017: -$1.7 mil.

2016: -$3.2 mil.

2015: -$4.2 mil.

2014: -$1.9 mil.

2013: -$3.3 mil.

2012: -$2.2 mil.

2011: +$486,461

2010: -$1.5 mil.

2009: -$2.6 mil

2008: +295,243

Source: Audit reports.