The University of Hawaii’s controversial plan to divert tuition revenue toward its massive repair and maintenance backlog flopped at the Legislature, with lawmakers instead authorizing state bonds for less than a quarter of the money UH said it needed to start fast-tracking the work.
"We have, really, a situation where we need to think hard about how we want to proceed going forward," UH Chief Financial Officer Howard Todo told the Board of Regents this week. "It’s something we can’t ignore, but we’re somewhat inhibited by funding because we can’t do a whole lot without the funds."
The regents’ Planning and Facilities and Budget and Finance committees tossed around ideas this week, including the possibility of raising tuition or borrowing money from the UH Foundation to fund some of the repair work and identifying a pilot building to demonstrate to lawmakers UH’s ability to execute a successful deferred maintenance project.
UH officials also suggested re-pitching the plan to use tuition-backed revenue bonds, surmising lawmakers may be more favorable now that the regents have imposed a moratorium on new construction projects.
Addressing deferred maintenance across the 10-campus system will cost an estimated $487 million, with 84 percent of that — $407 million — on the aging Manoa campus.
The university’s budget request to the governor and lawmakers for the fiscal year that begins July 1 sought authority to issue revenue bonds to eliminate the maintenance backlog over a period of six years. UH proposed repaying the bond debt with tuition revenue over 30 years.
At legislative budget briefings and hearings, 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 disastrous. They told lawmakers they need more staff and better management controls in place first.
Besides management concerns, lawmakers were too uncomfortable with the idea of placing the financial burden on future students.
"Let’s just call a spade a spade: Revenue bonds mean tuition. The kids are the ones who were going to have to repay this," said Rep. Isaac Choy (D, Manoa-Moiliili), chairman of the House Higher Education Committee and a major opponent of the tuition plan.
In the end, UH received $50 million in state-backed general obligation bonds for next year for systemwide capital renewal and deferred maintenance needs, a fraction of the $212 million in revenue bond authority UH had wanted.
Regent Benjamin Kudo, who led the board’s legislative task group, said despite the setback UH needs to show it’s still committed to eliminating the backlog.
"I would personally like to see us take away reasons why (the Legislature) shouldn’t give us the money," Kudo said at a committee meeting this week. "My feeling is that we need to show this year that we can start on a building — or maybe more, but to be modest, one building — that needs significant renovation and use it as a pilot project to demonstrate to our people and to others that we can do it … and our commitment to do it."
The committees asked the Manoa administration to come up with possible pilot projects — the deteriorating Kuykendall Hall was mentioned several times — and recommendations on how to fund the work.
Choy says he’s not interested in a pilot project.
"I’m not looking for a pilot project. I’m looking for a process," he told the Honolulu Star-Advertiser. "A pilot project, to me, could be a point in time — it’s one project. But if they can show me a process, show me resources, and a culture of getting things done, I would like to see that."
Choy said he can’t overlook recent reports and audits critical of the university’s handling of facilities maintenance and new construction.
"I’m evidence-based. That’s my evidence of what they can do," he said.
He cited UH’s 2013 internal audit of Manoa’s Office of Facilities and Grounds that found cost overruns for construction projects are the norm in part due to a lack of written policies and procedures for reviewing and approving work products and billings. The audit found the office also lacks policies and procedures to effectively manage, monitor and complete repair and maintenance projects on time.
Choy also cited the state attorney general’s investigation of UH Associate Vice President Brian Minaai, who was accused of favoritism and unethical conduct related to the construction of a UH-Hilo dormitory project.
Minaai, who oversees the system Office of Capital Improvements, was cleared of any wrongdoing and returned to his position, but the AG’s report, released in March, concluded "there is little doubt that UH could have handled this project’s planning, procurements and contracting in a more efficient, rational, coordinated and conscientious manner."
