Chancellor Hinshaw provides budget update to UH Manoa campusUniversity of Hawaiʻi at Mānoa
We are all justifiably concerned about the current budget crisis which impacts heavily on our State and our entire campus community. President McClain updated the UH community yesterday about the overall situation, so I wanted to provide additional information specific to UH Mānoa — many of these points I mentioned at a legislative hearing earlier this week.
Unfortunately we are facing an economic crisis on our campus, throughout our State and beyond. The reality is that budget cuts at UH Mānoa over the next two fiscal years will total at least $66 million or 26% of our general fund budget of $260 million. Our general funds are used to support our people, so this impact is deeply personal to our community.
Also, we must absorb these budget cuts in a very brief period of time — actually beginning July 1, 2009. Requested federal stimulus funds of $14.7 million each year during the biennium would help alleviate the reductions and offer bridging opportunities, but we have to recognize that these are one-time funds and are not yet in our hands. So, at the end of the biennium in June 2011, the reality is that we must have accomplished significant reductions to accommodate a significant on-going cut in our general funds. We must plan for that reality, as well as dealing with the current major reductions.
We are trying to distribute the sacrifice and not unfairly call on a single group to make up this massive shortfall. As I informed State lawmakers, a cut of this magnitude will seriously harm UH Mānoa‘s ability to provide core services to our students, require impacting reductions in faculty and staff, and potentially diminish our ability to serve Hawai‘i as the University‘s flagship academic and research campus. Many of our nation‘s other major research universities, like UH Mānoa, are certainly also suffering budget cuts, but our cuts appear proportionately among the largest.
To provide you a sense of the impact of such cuts, these are UH Mānoa‘s plans to accommodate reductions of $36 million imposed by the Governor and the Legislature earlier this year for FY 2010, which began July 1:
1. We will re-direct revenues from tuition, fees and other available funds. A special concern is that the tuition increases will be consumed by this cut, limiting our ability to further improve student services and financial aid for the increasing number of students who want to come to UH Mānoa. Our campus has received over 12,067 new and transfer undergraduate student applications for enrollment in the Fall 2009 semester, a 5 percent increase over Fall 2008. Student success is a major priority for our campus, so enhancing that outcome is critically important for our future.
2. We have been diligently working to reduce operating costs. We are currently expanding the Mānoa Green Days initiative which involves shutting off air-conditioning and "powering down" in buildings whenever and wherever possible (e.g. weekends and holidays). We appreciate everyone‘s cooperation and understanding, especially since many employees often work in their offices outside the Monday-Friday schedule. We also continue to upgrade our old mechanical systems because that significantly reduces our electricity costs. However, that does take time and money to accomplish. You can read more about Expanded Mānoa Green Days here: http://www.manoa.hawaii.edu/facilities/mgd
3. We are imposing reductions of 4% on all programs, with the exception of the School of Hawaiian Knowledge, our newest school, and Facilities because our repairs and maintenance efforts directly impact our ability to recruit and support students, as well as faculty and staff, and also generate research funding for the future. Unfortunately, these reductions have resulted in approximately 150 members of our faculty and staff not being renewed for their positions at this time. Among the direct impacts on students, we face a potential reduction of up to 500 course sections for the upcoming fall semester at this point in our planning. We continue to examine ways to reduce those impacts, particularly through the stimulus funds; however, the size of our cuts limits those options.
The Governor has recently imposed added reductions of $52 million to the UH, of which $29.4 million will have to be absorbed by Mānoa, which would be even more heavily damaging to our campus and our ability to serve our students. In essence, this cut is the equivalent of saying that almost two months of the work conducted by the campus people supported by general funds must be eliminated.
This is a financial tipping point in many ways. Since last fall, we have been reducing and redirecting existing resources to offset the $36 million cut. Unfortunately, we have limited resources or tools to meet this additional $30 million shortfall. Many universities are using such tools as furloughs (often 8-12 days for one year), retirement/separation incentives, pay reductions, and even elimination of entire schools. Some of these options for our State now reside in the legal arena. Our options are really limited because of the rapid nature in which the cuts must be implemented, the tremendous size of the cuts, available resources, and the limited flexibility of personnel actions.
Since last fall, our campus has been planning improved campus efficiency and cost-savings, both through our prioritization and budget planning groups.
The prioritization is directed at establishing our academic priorities and is already proving helpful in establishing high priority areas and meeting budget challenges even before the process is completed — on our website you can view the proposals for change generated during this process: http://manoa.hawaii.edu/ovcafo/newprocess/prioritization.html. There is much more yet to do and many of the required changes will take time — over a period of the next year to year and a half to accomplish such efforts, particularly with regard to reorganizations and consolidations/eliminations proposed during the process.
The Budget Workgroup has focused on meeting cost reductions through holding on filling positions to increasing charges for services to reducing utilities and other costs. However, the bigger impacts will take time, yet we need to make reductions quickly. This means we must reduce the number of people supported on general funds. You can review the workgroup‘s discussions here: http://www.manoa.hawaii.edu/ovcafo/newbdgtwkgrp/index.html
Do we have other resources because of our nature as a Research 1 University? Yes, we do, just as our peer institutions do. I hear folks often mention special funds but two points are important to recognize. First, special funds generated by self-supporting entities, such as faculty and student housing, are to be directed to the generating units according to state statute and are only one time sources. Second, the bond rating for the University of Hawaiʻi depends on maintaining a sizeable portion of those funds. So these funds are not truly flexible to use in other ways.
The other is RTRF — the return from research grants and contracts. We are already using more of those funds through charging additional fees for a number of services — and I think that is appropriate. However, we need to respect the fact that Mānoa has been successful in the research arena because of the investment of these funds in the research enterprise — and the purpose of such funds is to support the cost of doing research, not as a revenue stream to replace shortfalls in state budgets. The success of our research endeavors truly does impact positively on our entire campus and the State of Hawaiʻi in many ways.
It is important to appreciate the fact that, each and every day of the year, UH Mānoa researchers generate about $1 million of research and they have done this consistently for the past 4 years — that is over a billion dollars during that time, most of which was spent on salaries and expenditures that find their way into the Hawaiʻi economy at many levels. This is also the time that substantial grant money will be available from the federal government — we are competitive for those dollars, so we must tread carefully in significantly diminishing the ability of Mānoa to be a generator.
During these difficult times, we must do our share to help the State of Hawaiʻi and I know we all recognize the reality that many people in our community have lost their jobs and are struggling in many ways. So, like our fellow citizens, our reductions will be painful but, at the same time, I strongly believe that UH Mānoa, as a generator, is part of the solution to our State‘s economic challenges.
I assure you that we are increasing efficiencies to reduce expenses and also aggressively seeking new ways to generate revenue, such as increased research activity and private support. This crisis will take everyone‘s ideas and commitment to reduce expenses and increase revenue, while at the same time, keeping our eye on ways to strengthen our academic mission.
I am very grateful for everyone‘s efforts and have definitely benefited from hearing your ideas. If you have additional thoughts, comments or better ideas about the proposals described here, I absolutely want to hear from you. Mahalo for your patience and understanding as together we address these difficult issues.
Chancellor Virginia S. Hinshaw