The chairmen of the state House and Senate committees on higher education say they will not support the University of Hawaii’s plan to use tuition-backed revenue bonds to fast-track elimination of a repair and maintenance backlog nearing a half-billion dollars.
The university’s budget request to the governor and lawmakers seeks authority to issue revenue bonds to tackle the maintenance backlog over a period of six years, beginning in July. UH proposes repaying the bond debt with tuition over the next 30 years.
Addressing deferred maintenance across the 10-campus system will cost $487 million, with 84 percent of that — $407 million — on the 101-year-old Manoa campus. The figures represent the price tag for bringing buildings up to standard status and do not reflect any costs to modernize facilities.
Gov. Neil Abercrombie included $198 million in revenue bonds for UH’s proposal as part of his executive budget for the next fiscal year. The governor’s budget plan was released Monday. Lawmakers will take up the fiscal 2015 budget when the legislative session begins in January.
The higher education committees held a six-hour joint budget briefing Friday aimed at getting a feel for the university’s budget priorities.
There, UH-Manoa facilities officials revealed that the flagship campus is so inundated with ongoing renovations and repairs that throwing $400 million at them to eliminate the maintenance backlog would be a disaster. They say they need more staff and a strategic plan in place first.
"If we don’t have the human resources, this money is a prescription for failure," said Stephen Meder, Manoa’s assistant vice chancellor for physical, environmental and long-range planning.
He cited a recent report that found the facilities branch is short 93 positions, or about 25 percent.
Tom Katsuyoshi, director of Manoa’s Facilities Management Office, said he works 14-hour days and on weekends just to keep up with day-to-day operations with the approximately $50 million in annual repair and maintenance the campus handles.
He described the Manoa campus as a "war zone," with ongoing renovations and repairs happening alongside new construction projects.
"Our operations have been undermanned for so long that we’re at the point of drowning, basically," Katsuyoshi said. "If you give us more money to try to take care of the deferred maintenance backlog without the personnel to do it, we’re dead. You’re destining us for failure."
Meder said his office is working on a preliminary plan to ramp up Manoa’s repair efforts should the funding come through. The plan, which he expects to complete next month, would also help prioritize projects.
In all, more than 80 percent of the buildings on the Manoa campus — 209 buildings — have lingering maintenance needs, according to a June report prepared for UH. Some of the repair needs date back to the 1990s.
State Rep. Isaac Choy and Sen. Brian Taniguchi, chairmen of the higher education committees, said while they want to address the backlog, they don’t want current and future students to foot the bill.
They plan to ask their colleagues to consider eliminating the backlog using money from the state’s general fund or state-backed bond financing (general obligation bonds), instead of tuition revenue.
Under UH’s plan the university would issue about $440 million in revenue bonds over six years to make the needed repairs, but the debt payments would stretch out over the next three decades.
"I have a hard time explaining to parents that their unborn children will be paying for this," said Choy (D, Manoa-Moiliili). "I’m not going to support the monetizing of tuition."
"That’s long-term debt," added Taniguchi (D, Manoa-Papakolea). "The Legislature needs to step up in providing general obligation bonds."
Interim UH President David Lassner and his chief financial officer, Howard Todo, said the Legislature hasn’t been funding the university’s requests for repair and maintenance needs.
For example, Lassner said, UH last year requested $86 million for routine repair and maintenance and $73 million to go toward the backlog. It got $78 million for repair and maintenance, and nothing for the backlog.
"We got zero (dollars) as we have in past years, and that’s why we’re back here with a different plan," Lassner said. He added that the university is "wide open" to alternatives.
Todo said UH would prefer not to use revenue bonds, but said it’s faster than waiting for state funding to come through in small increments each year.
Abercrombie’s budget director, Kalbert Young, said it makes sense as an accounting practice to use long-term debt to finance major renovations and repairs that will extend the life of buildings, while using operational cash for minor repairs.
Responding to Katsuyoshi’s concerns, Lassner stressed that Manoa wouldn’t have to swallow $400 million all at once.
Under UH’s six-year revenue bond plan, the university would float about $200 million in bonds in the first year, with about $120 million for Manoa.
"There’s a big difference between $120 million and $400 million," Lassner said. "I don’t want to give the impression that we won’t step up."
The revenue bond funding would only go toward deferred maintenance. UH would continue to ask the Legislature for state funds to cover renovation projects, routine maintenance and repairs deemed necessary for health and safety reasons as part of its capital improvements budget requests.
Meanwhile, the Board of Regents last month unanimously approved a moratorium on new building projects across the UH system for three years to help redirect resources toward the backlog.