University of Hawaii athletics looks to reduce expenses

In an effort to reduce rising labor costs and accommodate coaches who do not stick around long enough to become vested in the state’s retirement system, the University of Hawaii athletic department is looking into the possibility of offering a “portable” retirement option.

The possibility, which is currently before the Legislature in the form of Senate Bill 590, was among several recommendations made by a 14-member “blue ribbon” committee charged with helping the athletic department come up with ways to reduce more than a decade of recurring deficits.

In convening the committee in September, UH President David Lassner said, “UH Manoa alone cannot support the program as-is and must take action to bring revenues and expenses into alignment.”

Coaches salaries and benefits, which add up to approximately $8.5 million per year, are one of the department’s biggest expenses and increased by $1 million alone between fiscal 2018 and ’19.

“The concept is that we are paying a 63% fringe benefit rate and a lot of that is on the retirement end, so if we could make portable retirement plans maybe we could reduce that rate by a significant percentage,” David Matlin, UH athletic director, told the school’s Board of Regents. “When we looked at some statistics a very small percentage of coaches actually get vested. So this could be a win-win. This could save us money and also give them a portable program that they could take with them somewhere else.”

Due to the transient nature of the profession, over the last 25 years, Matlin said just 18% of coaches in football and men’s basketball at UH became vested in the state’s retirement plan.

Matlin said the concept was, “a very creative idea” and forwarded by the committee that included members from the UH Professional Assembly and the Hawaii Government Employees Association.

HGEA Executive Director Randy Perreira, who proposed the idea, said, “A law regarding optional retirements has been on the books for a number of years, and the law currently provides that faculty could implement an optional plan, but it has never been utilized. I only suggested to the committee that the university should study the feasibility of whether or not an option plan would be cost effective for them while, at the same time, at the employee/coach’s option it could be beneficial to the coach.”

Perreira said, “The university needs to study whether it is something that would allow them to be competitive when recruiting for coaches.”

State Sen. Donna Mercado Kim (D, Kapalama-Kalihi Valley), who introduced SB 590, “I think it is fair. A lot of (the coaches) don’t get the 10 years. We already have something on the books but have never pulled the trigger, so this bill reiterates (the possibility).”

The bill would allow new employees to enroll in the optional program within 90 days of employment and would prohibit transferring from the optional plan to the state system. It would “require UH to make annual contributions for its employees within the optional retirement system and allow the retirement benefits of the UH optional retirement system to be subject to collective bargaining negotiations for the bargaining unit for personnel other than UH faculty.”