UH regents vote to clear $13M debt for athletics

Manoa Chancellor Tom Apple is heralding the nearly $16 million in immediate concessions to the financially troubled University of Hawaii athletic department as a step that “I think starts athletics on a great trajectory.”

The 15-member Board of Regents gave unanimous approval Thursday to plans to retire a $13 million accumulated net deficit, allow the department to award scholarships to out-of-state athletes based on in-state rates, and receive help from the Manoa chancellor’s office in paying staff salaries. The board also voted to create a regents committee to oversee athletics at Manoa and UH Hilo.

UH officials said the department expects to save about $1.6 million annually through the scholarship change and an additional $1.2 million on staff salary and benefits. Coaches’ salaries will continue to be paid by the athletic department, officials said.

“I think we’re ready to go now,” Apple said. Regent John Holzman, who chaired the board’s Task Group on Intercollegiate Athletics, said he expects “there will not be anymore deficits.”

Athletic Director Ben Jay said the changes should help the department finish the 2014 fiscal year in the black. “I see this as something we can sustain over the next few years,” Jay said, “but I think it is really critical that we bring in more community involvement and community support.”

The department has run an annual deficit for eight of the past 10 years and is projected to be about $2 million in the red when the current fiscal year closes June 30, raising the decade-long accumulated net deficit to a projected $13 million.

“We will move this debit from the athletics account to the Manoa chancellor’s office using nonacademic sources such as interest income and working capital to pay this off over time,” Apple pledged.

“No tuition dollars will be used because we believe student support for athletics should come about through the transparent discussion of determining a student athletic or event fee, not through general tuition,” he said.

But faculty and student groups sought more details on how the changes would be underwritten.

“Reducing the out-of-state (tuition) money is going to put the burden on the rest of the students because costs aren’t really going to go down,” said David Duffy, president of the University of Hawaii Professional Assembly board of directors. “This is not supposed to damage academics, but almost everything at UH revolves around academics.

“So what’s not going to get done? If it is working capital, shouldn’t it already be working?”

Bonnyjean Manini, chairwoman of the UH Faculty Senate, speaking as an individual, said she remains concerned about the source of the funding and effect on students.

“What those who love UH sports need to understand … is the harsh reality that it is expensive,” Manini said. “If UH athletics is to succeed financially, we need the citizens of this state to support the program through donations as well as through encouraging their elected officials to provide additional funding for it.”

Student Body President Richard Mizusawa declined comment pending more details from the chancellor.

The regents granted chancellors at the system’s two NCAA-participating campuses, Manoa and Hilo, the flexibility to award “gifted and talented” out-of-state and foreign athletes scholarships at in-state rates.

Apple said exemptions are already made for Native Hawaiians living outside Hawaii, military personnel and their dependents, members of the Hawaii National Guard and Hawaii Reserves, and some Pacific islanders.

The board said tuition waivers may also be granted for outstanding ability in nonathletic areas, including music and the arts.

Football coach Norm Chow said he was “encouraged. Obviously our administration is willing to support athletics in a university setting.” Chow said he hoped the recruiting budget would also increase. 

State Rep. K. Mark Takai, a frequent critic of administration athletic policy, said, “I think the biggest thing, from my perspective, is not so much the forgiving of the debt but the new willingness to see athletics for what it is, which is much more than 500 athletes playing on a field. It is really the state’s program.”

Kent Untermann, a local businessman and UH alumnus, said relieving the debt is a good way of investing in the future. “I’m a big believer in having a great university and part of having a great university is having a great athletics department.”

Jay, who had termed UH’s $33.5 million operational budget as “not very realistic” and “underfunded” soon after taking the job in January, said, “This goes a long way toward helping us.”

But Jay cautioned the aid “is just to pay for what we’re doing right now. Our costs go up each year. I mean, you eventually want to grow the budget to a point where you are getting the program what it needs.”

Apple said the athletic department has concluded a memorandum of understanding with the UH Foundation to explore additional ways to bring in donor money.

“We’re building a plan to go after larger gifts. Take a look at our lineup of gift-giving right now and we don’t have a lot of big money,” Jay said. “We need to go to those folks who, we think, have the capacity and the love for athletics. So, hopefully, I think some of those folks will come through for us.”

Jay said he is already “in discussion” with some prospective donors about naming rights for UH facilities, including a planned renovation of Klum Gym to an athletic performance center.

Jay said he hopes to tap further merchandising revenues. He and Apple said they plan to solicit support from the Hawaii Tourism Authority and Aloha Stadium Authority.

Apple brushed off previous discussion of the possibility of dropping down from Division I-A if financial hurdles couldn’t be overcome. “We’re hoping we’ll eventually get into a major conference, so we want to make sure we’re competitive. So, that’s really the direction we’re traveling in. We believe we can do that. That’s where we want to be.”