Although looming budget cuts will pose challenges for the University of Hawaii, President David Lassner said Monday that UH is considering its options and ways to handle the reductions.
State legislators reduced the UH system’s general fund budget by $47.9 million in fiscal year 2021-22 and another $42.3 million in fiscal year 2022-23, as part of a biennium budget bill currently before Gov. David Ige for consideration.
The budget also reduces UH-Hilo’s operating funds by $2.28 million in each year of the biennium.
Lassner said during a livestream Monday that university leaders were “caught by surprise” when the budget bill came out of conference in the final days of the legislative session that ended in April.
According to Lassner, UH was facing a $15 million budget cut through two years in a proposed House budget that included state general funds and federal coronavirus relief funds, but a proposed Senate budget included a $12 million increase to the university.
“So, the conference budget that came out in the last couple of days (of the session), we were surprised, frankly,” he said. “The building was closed. We didn’t have the usual conversations we usually would have … but we went from a cut of $15 million, to then an increase of $12 million, to a cut of over $85 million across the system.”
Lassner said he discussed with Ige different ways the governor might be able to help, and will be talking with the UH Board of Regents and legislators.
“We’re studying all of our options.”
The hope is to avoid furloughs and workforce reductions where the university can, Lassner said.
“But we don’t know if that will be possible at this level of reduction. So, I don’t want to make out that this is easy,” he said. “It is certainly not where we expected to be during the spring as we saw the economy improving and as we saw what we thought was pretty good news based on what the budgets looked like.”
Lassner, however, said some of the cuts could be restored in the second year of the biennium.
“The governor may also have access to some other kinds of funds that he can help with, but we’re not helpless,” he said. “We also want to look at all of our sources of funding. We need to be accountable and responsible, to use all the resources we have, to do so effectively, to reduce costs where ever we have.”
But the largest portion of the UH budget goes to payroll, Lassner said.
“So, ways that we can contain our payroll expenses have to be part of it, and some of that is about reorganizing and … we would like to protect our current workforce to the extent possible,” he said.
Lassner’s comments came a day after the Economic Research Organization at the University of Hawaii released a report about the economic impact of the UH system on the state’s economy.
According to the UHERO, UH-related expenditures totaled $2.31 billion in fiscal year 2020, more than $2 billion of which was spent in the local economy.
That spending resulted in $3.66 billion in local business sales, $1.02 billion in employee earnings, $186 million in state tax revenue and created more than 22,500 jobs, according to the report.
And because of higher estimated lifetime earnings of degree recipients, UHERO also predicts the 9,345 students who received degrees in 2019-20 will make more than $7 billion in “lifetime earning benefits” in the next four to five decades.
“State general funds spent on the UH system totaled $507.6 million in FY20,” economists Kimberly Burnett and Christopher Wada wrote in the report. “That means for every dollar of state money spent, UH was able to leverage an additional $3.07 of spending in the local economy.
“Taking into account the multiplier effects, each dollar of state funds translated into $7.21 in business sales, $2.01 in income and $0.37 in state tax revenue for Hawaii,” they continued. “In addition, every $1 million in general funds spent on the UH system generated 44 local jobs.”
“So, we’re a huge economic sector in this state … ,” Lassner said during the livestream. “UH is bigger than agriculture, we’re bigger than utilities, and people don’t think about us that way.”
Email Stephanie Salmons at ssalmons@hawaiitribune-herald.com.