University of Hawaii developed heady plans to build $38 million state-of-the-art pharmacy college

Back in 2011, when the University of Hawaii at Hilo began its concerted push for funds to build a permanent home for its College of Pharmacy, it released "Emergence of the College of Pharmacy," a book about the birth of the institution, a photo depicting a river of lava on the front cover. The idea was to use the metaphor of volcanic emergence, which seems suited to the Hawaii island setting.

But in addition to being a geologic force of creation, volcanoes are also hellishly hot, and it’s the heat that characterizes the debate over how much the state should provide in funds for the college, last year renamed the Daniel K. Inouye College of Pharmacy.

The late U.S. senator was the premier champion of the school, and had hoped to secure federal support for construction. Even Isaac Choy, the state House representative most vocal in his criticism, embraced the overarching aim behind Inouye’s campaign.

"His vision was to have economic development in all islands," said Choy, who chairs the House Education Committee. "And don’t discount the Big Island; I have so much high hopes for the Big Island."

In terms of job opportunity, nobody disputes that a pharmaceutical degree can lead to good salaries. According to the trade publication Pharmacy Week’s 2012 survey, the average salary for pharmacists nationally ranges from $112,000 to $131,000.

The issue is how the state should finance such construction projects. Earlier visions for the project had bottom-line estimates ranging from $66 million up to $128 million, but the serious proposal that went to lawmakers last session was for a three-story complex priced at about $38 million.

The House balked at even that figure, preferring to see UH administrators first tackle the backlog of repairs before new construction is authorized. UH has implemented such a building moratorium, listing several projects, including the pharmacy school, as exceptions.

Now the matter comes down to a battle of wills, pitting the UH and Gov. Neil Abercrombie, who views the college project among his top capital-improvement priorities, against House leaders. State Rep. Sylvia Luke, who chairs the House Finance Committee, expressed vexation last week over a UH public service announcement spotlighting the pharmacy school’s need for a permanent facility.

The administration request now stands at $28 million in state-backed bonds. John Pezzuto, dean of the college, is philosophical about the concessions.

"It’s not what we envisioned to try to be a top-ranked college," Pezzuto said in a telephone interview, "but it will meet the accreditation standard and allow us to proceed."

However, Choy is looking to add a new wrinkle. He’s introduced legislation to fund a facility of about $30 million as a pilot project, requiring the college to pay back the money over 30 years. The college also would have to adopt a financial plan that makes it self-sufficient.

House Bill 1652 sets the basic framework, but Choy calculated that the college could rely primarily on its roughly $10 million in tuition revenue for its operations, with research grants and limited state federal allocations for specific projects making up the balance. Choy said the plan pencils out so that the college could net about $1 million in surplus to be used each year to pay down the building debt.

"It’s a five-year pilot project," Choy said. "They build everything. … If they can’t make it, the bill will say we’re going to stop the program — shut it down."

The bill actually states that UH "may initiate proceedings to terminate the pilot program," but at least Choy’s intent is clear. The pharmacy school — and other UH professional schools, for that matter — should pay for themselves, he said.

"This particular model isn’t something I believe in for undergraduate or community colleges," he said. "But professional schools, I believe they should be self-sustaining. … I believe it’s a good business model for the university to follow.

"The revenue source should be tuitions, grants and donations, research, fee for service," he added. "They should be able to support themselves." Tuition assistance could come from the pharmaceutical industry, he said, which benefits from the development of a workforce locally.

And, he said, the college should work to boost its out-of-state enrollment, particularly from Asian countries. Tuitions for the current academic year are $10,380 for residents and $18,996 for nonresidents, rates that Choy said are $5,000 less annually than at the nation’s top schools.

But even though he believes the pharmacy school could stand to raise its rates, Choy said his figures are conservative, based on existing tuition levels.

Pezzuto said he has no objection to the self-sustaining model of operations, but said "it’s incredibly rare for a college of pharmacy to pay for its own building — the state almost invariably pays.

"Otherwise, I’m in complete agreement with him (Choy)," he added. "Totally self-sustaining. The fact of the matter is, if my budget wasn’t reduced, we wouldn’t be having this conversation."

Pezzuto said his budget was cut by 6 percent after the recession; also, the state discontinued paying for the faculty and staff fringe benefits.

The cuts have meant that his budget is now $1 million less than tuition revenue.

"We’re supplementing the state, frankly, by about a million a year," he said. "These things lead to a lot of misunderstanding. Would it be different if the senator (Inouye) was around? I think it would."

The floor area of the building in the revised plan is 40,000 square feet, half what was featured in the original blueprints, Pezzuto said. It would now be two floors rather than three, with the student lounge eliminated and research labs scaled back significantly. The first floor plan is the same, including a lecture hall, student services and teaching spaces.

The new building site is at the corner of Komohana and Nowelo streets in Hilo, near the university’s Imiloa Astronomy Center.

Early planning for the school picked up steam in 2004, when a feasibility study was done. That’s also when a federal appropriation for the building was sought but never materialized, Choy said.

The school was founded anyway in 2006, with the intention of focusing on Hawaii health-care needs, especially in rural areas. Officials have pushed back against the notion that the school would be more logically located on Oahu, with the medical school, citing the acute pharmacists shortage in rural areas where, they say, the practice of the profession is different.

Having the school rurally situated will enhance the likelihood that graduates will be prepared for and willing to fill those openings, they said.

"The pharmacist is an integral part of health care," Pezzuto said. "A lot of people don’t see that as Obamacare kicks in, with 40 million more people getting health care, how critical it is that we maintain that workforce."

The dean is hopeful the issue can be resolved this session, but experience has taught him to temper that optimism.

"I think the governor is sincere: He says we’re a priority project. I think the Board of Regents is sincere: They say it’s a top priority.

"But we were in the budget last year, too, and we ended up with zero."

CLICK TO ENLARGE.