UH of­fi­cials crit­i­cized for not us­ing spe­cial funds

Honolulu Star-Advertiser - - LOCAL BUSINESS - By Nanea Kalani nkalani@starad­ver­tiser.com

Law­mak­ers again re­buked Univer­sity of Hawaii of­fi­cials for a per­ceived lack of fi­nan­cial acu­men, this time for fail­ing to spend down hun­dreds of mil­lions of dol­lars in spe­cial fund ac­counts.

Dur­ing a 3-1/2-hour bud­get brief­ing at the state Capi­tol on Fri­day, some mem­bers of the House Fi­nance Com­mit­tee ex­pressed skep­ti­cism over roughly $30 mil­lion in bud­get add-ons the univer­sity is seek­ing for next year when the un­spent bal­ances in more than 100 spe­cial funds and re­volv­ing funds main­tained by the univer­sity are pro­jected to ex­ceed $250 mil­lion this year.

“Over a pe­riod of time, when I an­a­lyze the be­gin­ning and end­ing bal­ances for ev­ery sin­gle year, and the bal­ances re­main con­sis­tent, I’m go­ing to as­sume that those are the funds that’s ex­cess to the univer­sity,” said Rep. Isaac Choy, a cer­ti­fied pub­lic ac­coun­tant and for­mer chair­man of the House Higher Ed­u­ca­tion Com­mit­tee. “As far as I’m con­cerned, this is money — this is money that you folks can use.”

Choy cal­cu­lated end­ing bal­ances for this fis­cal year to­tal­ing more than $253 mil­lion in the var­i­ous spe­cial funds, which in­clude UH’s main funds for col­lect­ing tu­ition along with funds for li­brary fees, re­pair and main­te­nance re­serves, and schol­ar­ships.

“The thing that both­ers me,” Choy said, “is when you do have this re­serve and then turn around and raise tu­ition or have an enor­mous, enor­mous re­pair and main­te­nance prob­lem. … I’m think­ing, how come you guys aren’t us­ing this money?”

UH Pres­i­dent David Lass­ner said that each of the spe­cial funds at UH was cre­ated for a spe­cific pur­pose and use, and that any un­spent bal­ances are not in­tended for gen­eral use by the univer­sity.

“A bal­ance doesn’t mean it’s ‘ex­cess’ or that it’s ly­ing around,” Lass­ner said.

Choy, who’s been an out­spo­ken critic of the univer­sity’s fi­nances, said he wants to see UH use its ex­ist­ing funds more ef­fi­ciently be­fore seek­ing ad­di­tional money from the Leg­is­la­ture.

“They have money avail­able and they should bet­ter man­age it, that’s all I’m try­ing to say,” Choy said af­ter the brief­ing. “When you look at the mag­ni­tude of the funds and they’re com­ing in for $29 mil­lion, it’s like, ‘Ex­cuse me?’”

Kal­bert Young, UH’s chief fi­nan­cial of­fi­cer and a for­mer state bud­get di­rec­tor, said that while the crit­i­cism is “par­tially valid,” it’s rare for spe­cial funds to be tapped for un­re­lated uses.

“These spe­cial funds, and there’s dozens of them, they all have statu­tory cre­ation. The rev­enues that go into a spe­cial fund, the au­tho­rized ex­pen­di­tures that are al­lowed for a spe­cial fund, they are spe­cific and ex­plicit,” Young said.

He ac­knowl­edged af­ter the meet­ing that past Leg­is­la­tures, gov­er­nors and the univer­sity it­self have moved money be­tween spe­cial funds or si­phoned money out of spe­cial funds.

“It is true that the Leg­is­la­ture can do it, has done it. The ex­ec­u­tive branch could do it, has done it. The univer­sity could do it,” Young said. “But do­ing so is very un­com­mon, again, be­cause of the orig­i­nal pur­pose of the spe­cial fund.”

In a stated ef­fort to get cam­puses to use their tu­ition rev­enues more ef­fec­tively, Choy two years ago spon­sored leg­is­la­tion that an­nu­ally re­quires the univer­sity sys­tem to sweep any un­used bal­ances in each cam­pus’ tu­ition spe­cial fund.

UH of­fi­cials re­ported that un­der the leg­is­la­tion, be­tween $80 mil­lion and $90 mil­lion lapsed to the sys­tem last year. Choy said that fig­ure demon­strates to him that the univer­sity has too much fund­ing.

Young, how­ever, said that spend­ing down bal­ances by the end of ev­ery year isn’t a best busi­ness prac­tice be­cause it en­cour­ages a “use it or lose it” men­tal­ity that doesn’t al­ways make the best use of pub­lic funds. He said the univer­sity used that $80 mil­lion to $90 mil­lion to set aside re­quired re­serve funds for each cam­pus be­fore re­turn­ing any ex­cess to the cam­pus where the tu­ition was gen­er­ated.

This is the se­cond time this month that law­mak­ers took UH to task for amass­ing large un­spent bal­ances in spe­cial funds.

Last week Sen. Jill Tokuda, who heads the Ways and Means Com­mit­tee, slammed the univer­sity for mil­lions of dol­lars sit­ting in a spe­cial main­te­nance fund for the UH Cancer Cen­ter with­out any pub­lic plans to spend it at the cash-strapped re­search cen­ter.

When you look at the mag­ni­tude of the funds and they’re com­ing in for $29 mil­lion, it’s like, ‘Ex­cuse me?’” Isaac Choy

State rep­re­sen­ta­tive, cer­ti­fied pub­lic ac­coun­tant and for­mer chair­man of the House Higher Ed­u­ca­tion Com­mit­tee

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