Regents seek funds to meet $1.3 billion in UH repairs

Even with a freeze on new construction projects still in effect, the University of Hawaii system estimates it will need $1.3 billion over the next six years for capital improvement projects, with most of the funding pegged for deferred maintenance and renovation work.

The UH administration is considering a half-dozen ways to fund the effort using a combination of tuition revenue and state-backed bonds, according to a draft six-year financial plan presented Monday to the Board of Regents committees on Budget and Finance and Planning and Facilities.

One funding option would raise tuition by 2 percent to fund approximately one-quarter of UH’s capital improvement needs in each of the next two fiscal years. UH would seek the remaining balance in general obligation bonds from the Legislature under that scenario.

Other options would use as little as 10 percent and as much as 50 percent of the revenue generated by annual 7 percent tuition hikes already scheduled to take effect in each of the next two years.

The multiyear financial plan was requested by the regents’ budget committee, but no formal action was taken Monday.

UH President David Lassner said the administration is still evaluating its options before making a recommendation to the full board sometime next month as part of the university’s biennium budget process.

The university since last year has been trying to come up with ways to fast-track elimination of a deferred maintenance backlog nearing a half-billion dollars, with the majority — or $407 million — on the aging Manoa campus. UH’s controversial plan to divert tuition revenue toward the backlog proved controversial last legislative session, and legislators ultimately shot down the idea.

The draft plan — which officials emphasized is very preliminary — shows UH could eliminate its backlog as early as fiscal year 2020 under the various funding proposals.

"At this point we’re trying to look at a multiyear capital improvements plan that will both address the issues of the deferred maintenance backlog that we’ve all talked about, look at modernization of facilities, and also look at where new construction is required, subject, of course, to the moratorium," Lassner said.

The board late last year halted new building projects with the aim of redirecting resources to the repair and maintenance backlog. But the freeze allows for exceptions such as major projects approved by the regents before the moratorium and modernization projects needed to support academic needs.

It also doesn’t apply to campuses that have no repair backlog, namely, the new UH-West Oahu campus.

Under the draft six-year, $1.3 billion CIP plan presented Monday, UH-West Oahu is seeking approximately $174 million worth of new construction through fiscal year 2021 to accommodate increasing enrollment.

Meanwhile, the flagship Manoa campus is seeking more than $240 million for "major renovations" over the six-year period. The only new construction project listed for the campus is the controversial Daniel K. Inouye institute, at a cost of $40 million.

Regent Jan Sullivan, chairwoman of the budget committee, said the university will need to seriously consider the benefits of new projects, like the Inouye library, because they "are competing for deferred maintenance funding."

"For example, I personally do support the DKI institute as a good thing. However, I’m very much aware it’s competing for other funds at Manoa and I think there’s a policy decision that has to be made," Sullivan said. "Part of that has to be looking at how much in new structures we’re going to request funding for actually for the benefit of the university, for the students, because that’s what this funding request should be, in terms of priority."

Regent Benjamin Kudo, who proposed the moratorium, said campuses need to start looking at CIP projects in terms of needs versus wants.

"Different campuses and chancellors say that they want this building or they want that building," Kudo said. "I think with the limited resources — with the declining resources — that we’re receiving these days, the Board of Regents wants to turn that ‘want list’ into an actual ‘need list.’ That is, we want a determination at each campus, do you really need to have that? Because if you don’t need it, we can’t be asking the Legislature over and over for money to build buildings that we simply want."