Ka Leo O Hawaii

Issue date: 1/28/08 Section: News

Marion Higa, Former Hawai‘i State Auditor

UH President David McClain

A state audit report released in December of 2007 revealed that the University of Hawai‘i system has failed to demonstrate accountability, criticizing the university's inconsistent strategic planning and inadequate financial reporting.

State Auditor Marion Higa called for UH to "ensure that all sources of revenues … and expected uses of those revenues, are clearly accounted for in the budgetary requests" in order to improve its accountability.

One of the audit's primary concerns, for example, is the university's failure to address the tuition increase in its 2006-2007 fiscal year budget request.

"The tuition increase remains a controversial issue and stakeholders will demand assurances that the university will be accountable not just for the use of state funds, but for tuition funds as well," Higa wrote.

In 2005, the UH Board of Regents approved the largest tuition rate increase in the school's history. The increase, which went into effect at the beginning of the 2006-2007 fiscal year, will spread over the next five years.

In a letter to Higa, UH President David McClain wrote that the recommendations in Higa's report were "unexceptional," saying that the university has already taken these measures prior to her audit and report.

For example, McClain noted that tuition revenue projects had been prepared for both UH Hilo and UH West O‘ahu, and that UH has been preparing tuition projections for all its campuses for many years.

"These (projections) were not required to be included in either the executive or legislative budget submittals," he wrote. "However, when requested by the legislature, tuition revenue projections and related expenditure plans were provided."

According to the report, the resident undergraduate tuition for the 2006-2007 school year cost $3,504 per year, but by the 2011-2012 school year, resident undergraduate tuition will cost $8,400 per year, a 140 percent increase in over six years. With this tuition increase, approximately $400 million of additional revenue is expected through the 2011-2012 fiscal year, the report said.

Higa wrote that this increase in tuition was not in the university's budget request submitted to Governor Linda Lingle and the Legislature in 2005.

"As a result, the public will question whether the rate increase was justified and the Legislature will question whether the state funding request is warranted," she said.

UH also gave untimely and inconsistent information about the additional revenues and expenditures, pointing out that the university should have prepared this information prior to submitting its budget request, the report said.

For instance, the legislature requested information on UH Hilo and UH West O‘ahu's tuition revenue projections, but budget personnel for these campuses said they did not prepare this information.

Higa explained that this showed inconsistency on UH's part, since the community colleges prepared a statement of their tuition revenue projections prior to the legislative request. The University Budget Office also said that it prepared an annual tuition revenue projection.

Higa made several other recommendations to the university to improve its accountability, including taking advantage of state resources to reach consistent financial reporting and closely reviewing and monitoring old and current contracts to ensure that the university funds are properly used.

She also suggested in her report that UH should establish consistent policies for systemwide functions such as admissions, tuition deadlines and student registrations.

McClain assured in his letter that all ten campuses would have the same tuition payment deadlines beginning in the Fall 2008 semester.

"Since the date of the audit, the university has made significant strides in identifying and implementing common tuition payment deadlines … to accommodate the increasing flow of students registering at multiple campuses across the UH system," he wrote.

Higa then released another report in response to McClain's letter, once again criticizing the university. For instance, she said that the tuition revenue projections prepared by UH Hilo and UH West O‘ahu were only prepared after the legislative request.

"While we commend any recent efforts of the university, its response indicates a failure to understand past problems and likelihood to repeat them," she wrote.

Phase I of the systemwide audit report also investigated financial accountability. In their follow-up, state auditors concluded that "this second phase of our audit found a theme consistent with the first phase - that the university struggles to demonstrate accountability. We found that the university's current strategic plan has limited value and does not promote accountability."

This report is the second of two audits completed in 2007 dealing with concerns at the University of Hawai‘i at Mānoa. The first, published in February 2007, investigated the university's on-campus housing system. It concluded that:

"...conditions in the dormitories and on campus do not meet the Board of Regents' standards for housing and are not conducive to student academic achievement or individual growth and development."

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