University of Hawaii officials Friday were unable to answer pointed questions from state senators about who should pay for what could be more than $14 million worth of “fringe” employee benefits for an estimated 1,076 UH salaried positions paid through tuitions rather than the state’s general fund.

If the university has to cover the employees’ nonsalary benefits, UH President David Lassner told senators at a joint budget briefing with the Ways and Means and Higher Education committees that the cost amounts “to a $14.2 million cut to the university because it would be saying the university has to pay the fringe on these legislatively authorized positions, even though the Legislature isn’t providing the general funds for them.”

Friday’s hearing followed a similar one in December in which state Sen. Donna Kim — chairwoman of the Senate Higher Education Committee — grilled Lassner and other UH officials over hiring an outside firm to help recruit new students and for giving his vice presidents raises when student enrollment overall has dropped.

Friday’s hearing covered a range of UH issues, including the status of the Daniel K. Inouye College of Pharmacy, updates on the Atherton Innovation Center and Sinclair Library.

But the issue of how many UH salaries are paid through students’ tuition — and at what cost — dominated much of the hearing. And officials were unable to provide many specifics.

At the start of the hearing, Lassner addressed Kim and other senators by saying, “There’s no better way to start a new year than to be here with you.”

The arrangement to shift some UH salaries off of the state’s general fund and instead pay for them through tuition fees began at a time of fiscal crisis for the state in 2005.

UH officials at the time agreed to pay for some salaries through tuition fees, with the state kicking in $6 million for their nonsalary benefits.

But state Comptroller Curt Otaguro told senators that he could find no evidence documenting the arrangement in the Department of Accounting and General Services’ payroll system.

“I have not been able to locate any authorization within the DAGS accounting system,” he said.

Kalbert Young, vice president for budget and finance and the UH system’s chief financial officer, told the Honolulu Star-Advertiser following the hearing that the agreement was likely made as a way to save jobs during a time of financial crisis.

“It was during a downturn in the economy, two recessions ago or maybe three,” Young said. “It never got cleared up when the recession was over, and then the next recession happened and it didn’t clear up after that.

“These positions were previously paid for through general funds,” Young said. “If UH could help out the state (by paying salaries through students’ tuition), that would save the state, and then the state could continue to pay for the fringe like they always had been. It saved the state the need to find tax money, general funds, and preserved these positions at UH. This was an arrangement developed under the historical context at that time. They were trying to find a way to maintain the status quo. Fast-forward 15 years and people will say, ‘Hey this doesn’t make sense.’”

Young said he was not being facetious when he told the senators, “It’s only money.”

The cost for the employee benefits can be covered in a variety of ways, including raising student tuition and eliminating programs, he told the Star-Advertiser. Or UH could cover the tuition-based salaries and request additional state funds to make up the difference and pay for employee benefits.

In the meantime Young said UH has been methodically eliminating the number of positions that rely on tuition money through a variety of ways, including attrition through retirements and employees moving to the mainland.

The amount of tuition- based salaries has steadily dropped from $58.8 million in fiscal year 2014 to $27.2 million in 2019.

“We cut it in half,” Young said. “We’re systematically managing it.”

But Kim asked for many more details that UH officials could not immediately answer, such as where the tuition-based positions are located and whether they are faculty, administrators or others, as well as the current cost of their benefits.

In the meantime, Kim asked UH officials, “So, how do we control and set the budget when we have no idea there’s going to be this expenditure?”