Use Hoarded Tuition and Fees Now

by Tom Yamachika, President, Tax Foundation Hawaii

We have been writing several pieces about money languishing in special funds.  This week we will concentrate on one of them.  The University of Hawaii has a special fund for tuition and fees.  According to Department Communication 100 submitted to this year’s Legislature, that fund built up, as of June 30, 2025, almost $429 million.

And, unlike some of the special funds we have been writing about, lawmakers are very aware of the big balance in this one.  Senate Bill 2602, which recently passed the Senate Education Committee, would lapse any carryover balance in the fund at the end of each year to the State’s general fund.

Not surprisingly, the University of Hawaii and the U.H. Professional Assembly howled in opposition.

“Shifts in federal policy and the termination of grant funding have created significant uncertainty for the UH,” the University argued.  “At the same time, major technological changes relating to AI and other needs will require ongoing substantial investment in infrastructure.  The UH has outlined major initiatives to ensure it can more effectively and efficiently meet its mission despite these major challenges and to maintain accountability for executing on strategic goals.”

Those words might be more believable if the tuition and fees special fund was the only fund the University had.  Actually, HRS chapter 304A has three different subparts, one describing 22 special funds, the next describing 14 revolving funds, and the next enumerating 4 different trust funds.  Surely, between 40 different non-general funds, the University has the flexibility to take on its major challenges and meet its strategic goals.

And, let’s be real here, $400 million is a major amount of dough.  Maybe the University can justify squirreling away a few million here, a few million there.  But $400 million?

And when the University undertakes a major construction project, it doesn’t hesitate to visit lawmakers with hat in hand, as was done in 2019 when it asked for authorization to rebuild its venerable Sinclair Library into a brand-spankin’-new Student Success Center.  Yes, it got $41 million in authorization then, and costs ballooned to $57 million by the time construction started in 2023.  Did that extra $16 million come out of the tuition and fees special fund?  According to the testimony before the Senate Education Committee, the excess funds were pulled from a pot of general fund money earmarked for repairs and maintenance.  Meaning that the nine-figure sum in the special fund still sat there and there were fewer dollars to tackle the deferred maintenance backlog that the University is famous for.

At the Senate hearing, the University indicated that the fund buildup was due to an influx of pandemic relief funds.  But, as we pointed out with the example of Department of Hawaiian Home Lands funding some weeks ago, if a recipient of federal money doesn’t use it, it greatly increases the chance that the federal government will take it away.

We realize that the University’s president and chief financial officer are both relatively new in their respective positions.  They both pleaded with the committee that they have no intent whatsoever to leave large gobs of cash unused.  Fine, then.  Come up with an immediate and measurable plan to deploy what is needed.  And by immediate I mean now.  The State has a financial crisis now.  If this cash cannot be deployed now, lawmakers will try to beat it out of us, the taxpayers, now.

Use that hoarded tuition and fees.  Now.