University of Hawaii asks state to renew its $2.7M appropriation for athletics

How much is a successful major college athletic program worth to Hawaii?

The widely debated issue finds itself back on the Capitol doorstep this legislative session, with UH asking lawmakers to top off at approximately $17.2 million the amount of annual support athletics receives from the combination of state and school coffers. An additional $1.5 million comes from mandatory student fees.

The university has requested that the Legislature renew as a recurring annual feature of the budget the $2.7 million appropriation UH has gotten since 2017 and also begin picking up the tab on approximately $1.5 million in fringe benefit costs for 30 current athletic department staffers, including administrators and coaches.

Overall, UH athletics received $15.68 million in direct external support for the fiscal year that ended June 30, a Board of Regents committee was told during an audit review in November.

Of that, $12.98 million came in direct institutional support from the school, the bulk of it, $8.5 million, in the form of scholarships, UH said.

But this year, with the recurring status of the $2.7 million set to lapse, State Sen. Glenn Wakai (D, Kalihi-Salt Lake) said, “The university has many ‘asks’ and the ($2.7 million) was a one-time drop, so it is going to be up to David (Matlin, the athletic director) and (lobbyist) Joel Matsunaga to come back and validate why they should be getting the same amount.”

Rep. Sylvia Luke (D, Makiki-Punchbowl), chair of the powerful House Finance Committee, said she sees value in UH athletics for the state but that “it will be up to UH to prioritize its (requests).”

Even at the current funding level, spending about $40 million, athletics closed the last fiscal year with a deficit of approximately $1.9 million, its seventh consecutive deficit finish and ninth in the past 10 years.

The continuing deficits have forced athletics to “borrow” from the rest of the Manoa campus so that bills are paid. In 2013 then-Manoa Chancellor Tom Apple announced he was “forgiving” an $11.3 million deficit accumulated between 2002 and ’13. But by the time the books had closed, the figure had risen to $14.7 million.

Apple said he was moving the debt from the athletics account to the Manoa Chancellor’s office using non-academic sources such as interest income and working capital to pay it off “over time.”

UH President David Lassner, who also holds the interim Manoa Chancellor position now, has said that “while the term ‘forgiven’ has been bandied about, it (the deficit) has existed on the Manoa books” and has suggested a gradual “paydown” from athletics over a period of years.

In addition, Lassner has charged the athletic department with eliminating the net loss and becoming fully self-supporting by 2020, which, officials said, may include revenue allocations to the department.

In a 2015 presentation to regents, Matlin pledged to balance the budget by 2020 but also said the department would need additional state and student fee support along with improved ticket revenue and donations to accomplish the task.

In running a deficit, UH is hardly alone since NCAA reports have said only 10 percent of the 230 schools that compete on the Division I level are self sufficient.

Compared with peer institutions, UH says the percentage of all external funding it receives, about 38.6 percent, is less than the majority of its competitors. Schools in the Mountain West Conference, where it plays football, average about 40.92 percent, while in the Big West, where most UH teams compete, the average is 67 percent. Cal Poly and UC Davis are the only Big West schools that also have football programs, but they play in the lower Football Championship Subdivision compared to UH’s Football Bowl Subdivision membership.

In addition, in 2015 Matlin said UH faced $5.2 million in “unique” costs due to its geography, a figure the athletic department now pegs at $7.2 million. Matlin projects that without its “unique” costs, UH would operate at a surplus.

For example, UH subsidizes the cost for its conference opponents to play here but is on its own dime when traveling to face them on the mainland.

To help address that, the Legislature appropriated $3 million — the $2.7 million for Manoa and $300,000 for UH Hilo — beginning in 2017.

The appropriation as well as cost-saving measures and new revenues have helped UH lower its deficit from $3.24 million in 2016 to the current level.

As for the temperature in the Legislature for raising the financial support for UH athletics, Wakai said, “I can only speak for myself, but I see (UH athletics) as an important showcase for the state that gives us something to cheer about.”