Senate Standing Committee on Higher Education

Good afternoon. We're convening the joint committees on Transportation, Culture and Arts and Higher education on our 3 o' clock PM agenda here in State Capital Conference Room 229. We have one set of resolutions on the agenda today, SCR 178 and SR1 48.

If you haven't already, please make sure you have your written testimony submitted and make sure that we have time for everybody to have their voices heard. We will be asking you to limit your comments and we'll, we'll let you know when it's time to move on.

And with that up first on SCR 178, signed up to testify is the Hawaii Friends of Civil Rights. Zagbiani. Good afternoon.

Thank you very much for hearing this important resolution. It's the 60th anniversary of my 21st birthday and the 60th anniversary of the day I arrived in Hawaii. And I came to Hawaii 60 years ago as a 21 year old from the Philippines to attend the East West center and the University of Hawaii.

And since then, of course, I have obtained a Master's and a PhD with support from the East West center and the University of Hawaii and have been an active alumni volunteer. My most recent work with the East West center is we provide very informal mentoring opportunities for our students so that they get to meet community leaders.

A couple of times we've sent them to some legislators and other officials and community people. I would just say that the resolution says it all and I would like, I believe in its mission. It really does do important work and it's actually more important now than ever before. So I support the resolution.

Thank you. That is actually everyone who had signed up to testify in person on SCR 178 and SR 148. Is there anyone else here wishing to testify this afternoon? Please come forward.

Good afternoon. Chris Lee, Chair Lee, and also Chair Kim. I'm Pat Louie. I am also a former East West center grantee and President of the Alumni Association. And I think this is an extremely important asset that Hawaii needs to maintain.

The mission of the center, which was established, of course, in conjunction with the University of Hawaii in the 1960s, is to me about the spirit of aloha. It's about cultural interchange, exchange of technology, but also the understanding between peoples of east and west.

And as we see the erosion of our foreign assistance programs as well as the erosion of collaborative international foreign policy making, I think the lessons learned at the East West center are becoming more important than ever in terms of Hawaii. The very fact that the center exists here brings friends, many of whom later become investors, into Hawaii.

It also gives our- our students, both at the undergraduate as well as graduate level, the opportunity to learn about the importance of global citizenship. And I think that finally the center has trained many leaders.

We have prime ministers, we have presidents, we have many who have served the US Government both as diplomatic representatives and I myself served in the Obama Administration in the trade area on the board of the Export Import Bank. I do support this and thank you for introducing this resolution and urge its passing. Mahalo.

Thank you very much. Up next. Good afternoon.

Good afternoon Senators, Chairman Kim and Chairman Lee and distinguished Members of Senate for my glasses here, sunglasses are prescription so I don't try to be anybody trying to act cool or anything but my eyes are bothering me these days. But I'm a product of the East West Center.

I'm APEC Hawaii and past 12 years or I would say 14 years when I got involved with when Hawaii hosted the 2011 APEC conference when President Barack Obama was the President was the Citizens Advisory Committee and East West center played a major role. They were like the headquarters for the CEO and the business of- business- APEC Business Advisory Council.

And I know that Lieutenant Governor's office under Brian Schatz they were holding a government official so he was portraying the officials from the government. But in terms of the CEO and the Business Advisory Council meetings, everything was held at the East West Center.

And for myself I kept on continuing getting involved with the East West Center and I came up with all this strategic business plan meeting the diplomats and ambassadors from each dignitary countries and they did play a major role for me to grow this way and I can contribute back.

I think all the people who got exposed to the East West Center probably feels the same and I think Hawaii has a big asset of having the East West Center working with the University of Hawaii. And this way we can bridge the gap between Indo Pacific Region.

Now we have a plan to work with the European Union due to Euro Asia and we can count on the East West Center for expertise and the academia side as well. So in those behave I support the East West Center. I know there's tragedy that the Federal Government under Trump Administration under the State Department is cutting the funds.

I know that we have a diplomatic residence in East West center right now who's representing the State Department. So I don't know which direction you're going to take but I know that if our current Secretary of State Mario Rubio looks at our measure, hopefully they do Fund the East West Center.

Thank you very much. Anyone else on SCR 178 and SR 148. If not, are there any questions? Seeing none. All right, thank you everybody. Okay, so with that, why don't we go into decision making. We'll take both resolutions up for the same vote at the same time. So for SCR 178 and SR 148 chairs having conferred, recommendation is to pass these with amendments.

Making technical amendments. Is there any discussion? If not, Vice Chair for the vote.

For the Committee on Transportation and Culture and the Arts, the Chair's recommendation on SCR 178 and SR 148 is to pass with amendments. [roll call]. Thanks. For the Committee on Higher Education, the same recommendation to pass with technical amendments. [roll call].

We are adjourned.

Good afternoon and welcome everyone.

We are city on higher education. Today's Thursday, March 20th. We have the 301 Agenda. It's now 311 Conference Room 229. And this meeting is being televised live on YouTube. And in the likely event that we have to abruptly end this meeting and this hearing due to technical difficulties, Committee will reconvene to discuss any outstanding business on.

I don't know, we have the deadlines, I guess tomorrow, 3pm in this conference room room 2 to 9. And a public notice will be posted on the Legislature's website. Reminder, we have a one minute time limit per testifier and your time will start when I do call your name.

We do have a number of resolutions on the agenda for today. We're going to start off first, let's see with Senate Resolution 32, Senate Concurrent Resolution 50. We're going to take that both together and testifying on this measure. So when you do come up, you can testify on both measures because that is the same text. So we have Della Terroka, University of Hawaii

Aloha Chair, Vice Chair and Troy. Sorry, Senator Hashimoto. So yes, we are in support of the resolution. We actually have already started the process of establishing the Bachelor of Science in Nursing at for University of Hawaii Maui campus. I'm not sure. Oh yeah. Is that. Is that Laura?

Okay, so we do have the Maui Vice Chancellor and Nursing Chair on zoom. If you have questions for us, stand into work. Thank you.

Okay. Did you and Maui wanted to testify as well? We're just going to answer questions. Okay. We also have Paige Choy from the Health Care Association of Hawaii in support. And that's all that I have. Is anyone here wishing to testify on this measure? Hearing None.

Okay, we will move on to Senate Resolution 160, Senate Concurrent Resolution 142 requesting the Office of the Auditor to conduct a financial and performance audit of the University of Hawaii Manoa facilities. We have Lois Manning. None.

Hi, Good afternoon. Chair Kim, Vice Chair Kidani and Senator Hashimoto. Thank you for the opportunity to submit testimony. We stand on our written testimony that I believe you received. It might have been submitted after the deadline yesterday, but we stand on our written testimony.

Okay. Can you just sit? There's anyone else? Lewis is the only one signed up. So anyone else wishing to testify in this measure? Hearing None. Members, any questions? Lois, I have a question. So as far as the audit is concerned, it's both a financial and a performance audit. And is there.

Has there been an audit, as far as you know of the athletics in the past?

The only one I know of is the audit that we stated in our testimony that is required by NCAA bylaws that is conducted every year. Okay. I think the last one was December.

That's like a perfunctory audit on, on. The finance portion of the finance and operations. Mostly finance. Right. So performance audit?

No, no, not that I know of.

Okay.

So I, I guess kind of going with the line of questioning from the Chair, has there been any thought of or is there any internal type of discussions on performance type audits that happen at the University or for athletics? So how do you know that you should be doing things better? I suppose is the question.

I think. Well, we do have performance evaluations from the HR level at every level. I think the Executive managerial positions have a 360 evaluation, and then below that, we have annual evaluations of our employees, but nothing programmatic. Nothing programmatic other than to know that we do evaluate everything that we do.

When we have an event, we have a debriefing and we evaluate the event, see what went right, what went wrong, and how we can be better. And that's across all of the operations. It would be my job to, in my former position and the Princeton position to make sure that we are operating and functioning with. With efficiency.

I can tell you that in my previous job, I do try to evaluate how we can be more efficient and more productive in our. In our output, but nothing programmatic. That is mandated by the, by the Athletic Department.

Okay, and then do you, at this juncture, do you guys have a handle on your deficit and why that's happening.

So the deficit is that you were looking at was from the NCAA report. Right. The 2.0. But the deficit. I think we explained it in the, in the testimony. But the last two years we have not had a deficit. We've had actually a. We have not have a deficit in the last two fiscal years.

Right, right. But I think. But you. But you know that you're on the brink of potentially going and. But do you have a handle on all those reasons? So we have. And the drivers.

Correct. We have a contingency plan that is based on what our existing budget is. Right. And our existing budget right now is the same as last year, minus million in recurring funds. So we are not planning beyond that unless we can figure out how we can raise money for new drivers. Okay, thank you, Jeff.

So in your testimony, you have that. You said that the purpose of these resolutions seem to be duplicative of what is already being conducted to meet the NCAA bylaws. But the NCAA bylaws does not cover performance. Right? Correct. Yeah, correct. So in that sense it's not duplicative.

Correct.

Do you think that this audit should be handled by the uh, Auditor or the Board of Regents Auditor auditing versus our State Auditor?

I'm. I'm not sure what the difference would. Would be in a performance audit. To me, a performance audit would be whoever conducts the performance audit. It would still be a performance audit. So I'm not sure exactly chair how what the difference would be.

But we are open to an audit because we acknowledge that we need to be better and we always need to be better and we always want to be better.

So on that basis, do you. Have you folks ever requested a performance audit?

Not to my knowledge. But Tiffany, not specific.

Well, based on what happened back when Graham was here and the whole issue of what was going on there, and parents had to seek out our. Our ability to have the hearings to find out. And then we went through all kinds of stuff and even the report that came back from the sports css. Yes.

And seemed to have had issues on who they actually, actually interviewed and who was in the room when. When these students were being. Student athletes were being interviewed. I mean, there were all of these issues. And so I would.

I thought that perhaps you folks would have had some kind of audit if you want to be better, because that is a signal that there are some issues. Correct.

And what turned out from that whole process was that it wasn't just football, that the student athletes were coming out and telling us there are issues with some of the other programs. So, yeah, I think perhaps I can.

Tell you that we have improved in that area.

We have implemented the real response where student athletes can have a direct line, an anonymous direct line to us, and we are monitoring that on a daily basis and addressing the issues that come forward from the student athletes, whether it be something about their supplemental meal or something about how their coach is treating them and stuff like that.

So we are. I feel like we have gotten better in that. In that sense.

And that's based on what? Just talking to.

Knowing what the issues are, because they are coming forward and telling us that, you know, I'm not comfortable with this or I'm upset about this. And. And so we invite them to come and talk to us if they're feeling.

If they're comfortable doing that, but if they're not, then we continue to try and get more information from them so that we can, you know, properly address them.

I guess I'm troubled because the number of ASUN athletes that have come to us, and we actually had somebody working here in some other office, and they were free to come forward and then did come forward to us. And what they say is they're afraid. They're afraid of retribution.

They have concerns about the coaches, and these are individual people coming, and they're not bringing it forward. And when they did bring it forward at 1.0 in time, it was ignored or there was retaliation by the coach because the coach found out about it.

And, you know, you had a student athlete region that was a student athlete on here just until last year, and she had raised a lot of the issues and concerns. So I don't feel that it's been addressed entirely.

So, again, you know, if people feel that they're not going to be treated appropriately when they raise these concerns, they're not going to bring it up because they see what happened to others.

I understand. And part of the thing that we need to try and navigate through is the willingness of them to come forward. I mean, they can tell us a concern, but they're not. We give them options to. Do you want to talk to the coach or did you talk to the coach or.

We're trying to get them to come forward, but they're very, very hesitant. And I understand why, and this true at any institution, but I'm not sure how to get them to come forward and feel safe that they're not going to be retaliated against.

So what about the concerns brought to my attention and others regarding staff that works in the athletic Department that feel that they have been bypassed, feel that interim appointments have been brought in and that they've been passed over for favoritism, for NCAA violations that is going on and being swept under the carpet.

These are all issues brought up by not just students, but staff. And again, they're afraid of retaliation. And I tell them about your whistleblower, whistleblower process that you folks have.

They don't trust that at all because at the end of the day, they feel that that's going to go back to the Administration and they're going to be able to figure out who did the whistleblowing. So those things are still ongoing.

I'm not. I can't comment about favoritism or anything like that or people have been passed over or NCAA investigations. I have not been a part of any NCAA investigation since I've been at the University. I think there was one involved before I returned to the University, but since I've been back, I haven't been involved in any.

Okay, well, I spot for my attention that there were. There were allegations brought on and was raised to the Administration, and it was not. It was not followed through, and they were actually intimidated if they were to ever bring it up, bring it forth. So they. They did not.

But I'm just saying that these are areas in which needs to be reviewed. And I think that athletics. I mean, this is not my resolution, but, you know, these kinds of resolutions will continue because obviously I'm not the only one people are calling, and I can't speak for my colleagues and why they're.

Why they feel this is necessary, but obviously, based on my experience, these things are happening that it happens all the time in different areas. But I think to the degree that's been happening, that that's a signal. Yeah.

Where there's smoke, there might be some fire, and do we put out the smoke or let it go until the fire burns? So.

Understood. And. And yeah, it would be interesting to know if it's continuing to happen in present day or. Or did it happen and we're continuing to do things that we shouldn't be doing or whatever that.

Well, I think the complaints have. Have eased up somewhat now, but I don't know if it's because it's been cleared up or because people have just gotten so fed up that, you know, even when they call my office, they can't get. They can't get relief.

You know, and if anything, I've made them be the villain that's supposedly bringing this up to. Uh, and. And I get accused of sending out all these Emails, because I asked you folks questions and so that I don't have to bring it up in the hearings. And then we get beat up for that.

So, you know, you can't win. We can't win around it.

I feel your pain, but I will say that I am open to having any conversation about anything that we are not doing correctly and get to the root of the problem and the truth of the problem.

Appreciate that. Thank you. Members, any other questions? I guess it's kind of a General question, is that have you seen any change in any changes with the different changes in leadership at the University?

Are you talking about the President change or changes? Always change with somebody different. Right. Whether it's good, bad or not. But I think President Hensel's got a lot on her plate right now with all the federal stuff that's coming down. I think she's doing a great job. So in terms of change, I'm not.

I'm not sure I was there when President Lassner was there, but I was not the athletic Director when President Lassner was there until the, you know, final month or so of his. His tenure. But I think. I think we're headed in the right direction.

But you were the assistant athletic Director, right?

Correct. Thank you.

Okay. No other question. Thank you, Lois.

Thank you.

Okay, we are going to move on to Senate Concurrent Resolution 138 and Senate Resolution 155, requesting the Auditor to conduct a management and performance audit of the Office of Vice President for Academic Strategy of the University. And we have Deborah Halbert and Stephen Schatz. Just want to go up some.

Good afternoon, Chair. Vice Chair. Member of the Committee, Deborah Halbert, Vice President for Academic Strategy. We stand on our written testimony and I'm happy to answer question. As you noted, Steve Schatz is here as well, Director of P20.

Okay, thank you. Stephen? Stephen?

Good afternoon.

Good afternoon.

We stand on our written testimony, but I'm happy to answer any questions about. Excuse me. About what P20 does and, and how we fit into the Vice President's office.

Let me just ask, is there anyone else wishing to testify on this measure? Okay, thank you. Members, questions. So this audit, what do you think perhaps is the impetus for this audit? I mean, this resolution? Yeah, either one.

So we've tried to determine what might be the impetus for it.

And I'm guessing, though we don't know that there are concerns about articulation and transfer between the 2 and 4 year campuses, potentially the larger spectrum between K-12, as well as the University and potentially more information and knowledge about how those processes work internal to our office.

Okay. And you do say in your testimony that you don't oppose the audit and believe it could be an opportunity to provide clarity and insight on our ongoing efforts. Certainly. So do you think that could occur without a resolution or an audit?

Well, and just to give you a little bit of background, I've been in this position for a little over two years now. And when I took this position, besides Steve's role, all the other new people, everyone else is new. So both of our associate vice presidents, as well as our Director of Institutional Research.

So we have a very new group. We've been working together, we annually meet now to establish goals for the year and to think through our top priorities aligned with the UH strategic plan. So we do try to create that framework, but it's been a.

It's been getting everyone up to speed as well on the institution and its processes. Also, none of the campuses report to us, so at one level, it's working with the coalitions of the willing across the 10 campuses to make their articulation agreements and all the different components of IT work.

At that point in time. Okay, so how many grants do folks administer? Do you want to talk to the grants? Sure.

The number. I'm not sure I know the number off the top of my head. But. Some of our bigger ones are the Federal Perkins Grant and then we have some other discretionary competitive federal grants that we've applied for and achieved. One of those is a Preschool Development Grant.

So I think a lot of folks think of P20 as sort of only doing high school to college to career workforce development, but actually it starts a lot earlier. So we have a Preschool Development grant that we collaborate with the office, the Executive Office of Early Learning and Administrative Administering.

We also have the GEAR UP grant, which is a grant to try and get more low income and first generation students into college, but also a federal discretionary grant which we don't know the future of that.

And then historically we've had the statewide Longitudinal Data System grant which has enabled us to work with partners including UH, DOE and DLIR to establish data sharing.

That grant or that grant doesn't seem like it's going to be available on a federal level, but we were actually ineligible to reapply anyway, so that we knew that that was a cliff for us. And then we have some philanthropic dollars as well.

And those, some of those are grants for specific activities and some of them are support for operating costs.

On an average, I would say the amount of grants or total dollars that you folks get yearly.

So the, the, the CTE, the Perkins Grant is 7 million. But mostly that's a pass through the. Sorry, can I get back to you with that number? Exactly.

The answer is going to be a little complicated because some of it is stuff that stays with us in our shop and some of it we sub grant to either community organizations or, or DOE or uh, community colleges.

That be good for us to know if you could.

Sure.

Delineated out that way. And that in order to have these grants you do have to meet objectives and performance measures. Okay, but are you then evaluated in any way after each.

Yes. So I mean the, the federal grants are subject to an audit and then the, you know, the philanthropic grants, it depends on the, the partner who, who we're working with in terms of what the reporting requirements are and, and the metrics they expect us to achieve.

Okay.

I guess from a programmatic standpoint, I don't know if you saw the other resolution, which was, you know, developing a comprehensive list of Bachelor's degrees program aligned with job opportunities. I feel like that's something that P20, that's your focus, I guess.

What has been your progress of like, job readiness thus far and in achieving, you know, some of those goals and reviewing what the numbers are looking like?

Yeah, I would say, just to clarify, we, you know, a lot of what we do is about alignment between high school and college programs. And one of the things we're trying to do is influence which kinds of programs are offered. But it's influence. Yeah, so it's, it's data that we provide.

Some of that is on hawaiidxp.org some of it is on other sites. But it's, but it's, again, like VP Halbert said, it's a coalition of the willing. We've been putting a lot of emphasis into four areas, which is teaching as a profession, healthcare, IT and skilled trades.

And one of the things that we intend to do with our new Perkins grant is take aside some of that money and instead of formulating it out to our sub grantees and allowing them to basically, you know, use it as they always have, is to say, now you've got to commit to a program in these areas that we know are areas of need for the state.

And then we're working with DBED to talk because those are like current economic development needs, those four. But when we talk with the DBED folks, we get an idea about future areas.

So, so we're excited to take a chunk of that money and make it a little bit more prospective, proactive and, and focused specifically on, on workforce needs.

So it's ongoing?

Yeah, it's absolutely ongoing. But it's also a collective effort. Right. Like we, one of the, we are really doing our best to influence and set direction and say these are, you know, some, some areas of need. But I also am not the Superintendent of Schools nor the President of the University. Right.

So there's, you know, we're working as a collaborator, as a facilitator, and hopefully in a synergistic way to get folks focused on current workforce needs and then economic development areas for the future.

Are they listening, you think?

Yeah, I think they are. And I think one of the things that's helping is that you have currently a Superintendent who cares about workforce a lot. I think you have more collaboration between folks at DBED and the educational institution. So we're, we're moving in a direct.

We have more interest from the Legislature, I think, than we've ever had in workforce development and education collaborating. So I mean, it's not where it needs to be. But you have the LG convening a group who's trying to solve the teacher shortage.

So, you know, everybody's got their eyes on what do we really need to have kids, go through the education pipeline and then live and work and thrive and prosper right here in the state. Thank you, Chair.

Other questions? If not. Thank you. Thank you. Okay. SR 154 requesting the Office of the Auditor to conduct a performance audit of the University of Hawaii Foundation. And we have John Han here to testify.

Good afternoon, Senators. Thank you for allowing us to testify. We have submitted a written testimony and we stand by our testimony. And we're here to answer any questions you guys may have regarding the. The resolution and the foundation.

Okay. Sit right there. Anyone else wishing to testify on this measure? Hearing none. Questions? Members, I can start off. You say in your testimony that your bylaws, under, through your bylaws, you undergo an annual audit of your books and records by an independent certified public accountant, right? Yes. But do you do a performance audit?

Because that's what this resolution is calling for, right? A performance audit.

Yeah. Can you define performance in terms of what you're referring to?

Well, if you read the resolution, it explains that, you know, the way in which you perform and carry out your duties and so forth.

Yes. Based on what I took away from the resolution, when it comes to efficient management of donor funds, that's something that is part of our audit process. And it has to do with whether the donor intent is aligned with the way the funds are expended for the purpose of supporting the University.

And that is one main factor during our annual audit.

Okay, but are there other things than that? Right? I mean, yes, you have the donors, but a way in which you deal with the people in which these funds go to.

I know we had issues with the ACM contributions that was made and whether or not those dollars, whether or not the entity donating the money felt that they were not getting detailed, detailed like they used to in the past on where the money's going and how the money's utilized, and that came directly from the entity that gave the money.

So, you know, these are, I guess, issues is why this resolution may have been introduced. So. But that's not covered. That's not covered under your financial audits.

May I interject? So, Tim Dolan, CEO of the foundation, when it comes to whether a fund that's been donated goes into the right account, I think the reference you made around ACM was more around our recognition of that rather than did it fall into the right account?

Oh, I'm not questioning the right account at this point. What I'm questioning is the donor themselves feeling that they're not getting a complete report on the monies that they put into that they donated and how the money was was do all given out to the entities that they had. They had specified.

Understood. So I think with all University foundations, because we have over 20,000 donations every year historically, it's always a challenge to provide the kind of robust reporting that donors deserve. We don't always get it right. We've been trying to improve our donor stewardship program certainly since I've been there six years.

But in terms of a grade I think we do pretty well. And while the donor stewardship capacity is not something that the auditors look at, certainly our board of trustees who evaluate our total performance often will say what are you doing to make your reporting better for our donors? So that's part of their process.

And I know that I get those questions from our board of trustees every year.

But that doesn't cure the fact that there are concerns. In the case of the culinary school, the understand that was brought to my attention was that a donor specifically wanted the funds to go to build a certain kind of lab. And it was not done and they were not made aware of it.

It's not done, not made aware of it. And when they finally became aware of it, they were not happy about that. Now, I don't know if that's clearly with you guys or I'm sure it was with the University who failed to satisfy what that donor wanted and they were never notified about it.

So yeah, I don't specifically know the instance you're referencing, but I do know with culinary there have been cases where the communication back to the donors has been patchy. So I think that's fair. Do I think it's an existential problem in terms of our robustness, in terms of our books, in terms of our credibility?

I think the one thing I would add to that is when you look at the performance of the foundation over the last six years, we've almost doubled the amount of dollars raised for UH. And a good barometer of whether donors believe you're. You're getting it right. They vote with their feet. So I'm not suggesting that we're perfect.

We are absolutely not perfect. But this year we'll probably bring in over $150 million in philanthropic revenue for uh, as compared to last year. It was 115 couple years before that. We were in the 80s when I got here. We were probably in our 70s.

So we're growing robustly each year without any additional money from the state to run the foundation. And I think that's worth taking into consideration. If we're not doing it right. I think our donors are pretty. They're pretty positive about the direction we're going in.

What about the criticism that many people who donate or people who raise money for the University then told they have to go through the foundation in order for that money to be donated?

When they wanted to donate directly to a program or you had entities that do raise, like in the sense of the culinary school, it was all different people's entities that they had solicited and gave money, but they had to go through the foundation. And then when they went through the foundation, they didn't feel that they were.

Money was used the way they were supposed to or for what it was. And then they didn't get good reports. So this whole thing that the University can't receive any funding, which is maybe another issue, not necessarily your issue at this point, but that there's no other way they can donate other than going to the foundation.

Well, so can I just say that athletics is a good example? I mean, AKA Receives. Sorry, they receive some funding that goes through AKA and then eventually goes through the foundation. The UH Foundation indeed is the repository of philanthropic revenue for the University. And that's based on the bylaws of how we were established. That is true.

We, with our robust financial measures that we have, we end up being the very body that donors tend to trust. Not to say they don't trust other entities, but we found that for the most part, the donor confidence in the foundation is quite high, as evidenced by the increased and rep.

Increased amounts of revenue that we're bringing in.

Yeah, well, again, individuals tell me that it's not the foundation who went after the money, that they actually went for the money and you get all the, you take all the credit for it. I'm just telling you these are the concerns raised, number of donations.

So the other part of the process is that the foundation, we have a very robust infrastructure in the foundation in terms of how we expend them the funds to directly support the. The University.

So a lot of these, maybe smaller or other organizations that is really good intent to support the University, but don't really have a mechanism to go ahead and say, okay, how do we get this money back to the University for their Direct support.

So, for instance, this year we're looking at dispersing more than $70 million directly for University support. And that would be a record amount in the foundation's history. And we're continuing to increase that impact. And it has been. I mean it does take quite a bit of infrastructure and the support.

And I think from that perspective it does make sense as far as having a central organization that manage that process. And as far as the credit goes, I think Tim can say the same. It's really not about the credit. It's really about some of these private funds that are raised. It can be properly managed.

That's the other part, the management part. But the other part is that the foundation had no hand in raising any of the funds. And. But you do take a fee for it, no matter what, right? You take a fee of some of the funds.

I might, I might suggest that it's.

Yeah, the fee would go to of course, to disperse and so forth. I'm not questioning that, but I'm just telling you that what, what we, I.

Think there has, there have been cases where some people would, would make the case that gee, I gave the money and the foundation really didn't do anything to augment that process. But what we've learned is the amount of touch points the foundation has in raising the kind of money we're raising.

We very much are involved almost the whole step of the way. It doesn't mean on every gift our fingerprints are directly on it, but the amount of rigor that we put into raising money is significant.

So I guess when are you guys benchmarking on how you're doing things with other institutions?

All the time. Yeah, all the time. So we're, we're basically always looking at how much money does it take to raise. So we want to keep the costs for the foundation as low as possible and we want to raise as much money for the philanthropic benefit of UH as possible.

And so how are you doing those type of reviews?

So typically we'll look at peer institutions and the two formulas are, are pretty straightforward. You look at the amount of revenue you bring in and you look at the, your operating budget and there's a ratio. So our operating budget is around 18 and a half, $19 million.

As I said, this year we're going to bring in over 150 million. So the ratio there is pretty favorable when you look at the cost to raise the dollar.

But how often do you do this review.

John? I don't know.

I look at it regularly. At minimum once a year. What I do is I along of what Tim was sharing is we look at we identify peer institutions and Peer institutions by different metrics. One is definitely funds raised, the size of the institution, their endowment size and their advancement, operating budget.

And are you looking at process though? Process of how you actually are doing things within the foundation versus other peers?

Yes, yes. So I can give you one example. There is a CFO peer group. There's about 15, 20 different institutions that meet regularly to kind of discuss about processes and how things are done as it relates to performance of management of the funds, disbursements and various different activities that happen.

And also, you know, there are, I know Tim, the development side engages with consultants, consultants in the industry who are well versed.

And so you have any of these consultants or you just, or are you bringing in consultants to give you advice?

Well, our board of trustees would routinely want us to, to demonstrate our value. And I mean we would happily look at our statistics in the comparative sense with other universities because as I said.

Well, I guess the question is, is when did you, when was the last time you looked at it comprehensively? So at least you can, you know, then we can say, okay, you did it.

John says every year. And I don't, I don't.

But is that a form of okay, everyone, we're going to gather and we're going to do the review or is it just. Oh, you know, we're looking at it and yes, we kind of, you know, cursory did it, but is it intentional?

I guess is the question and is there some type of outcome that you can show that you did the review?

Yeah. I mean as far as the in depth discussion about the, the benchmark results and the outcomes, I believe that was done a comprehensive one before I was hired in 2019. And I did look at that data and there were some actionable things actually. So who did that? That was our board of trustees. Okay.

So maybe, yes, maybe it's naturally time and at least it's another set of eyes looking at. I don't think the audience are a bad thing. I think it's just, you know, I think it's just good to know that if you're going to continually raise more money, you know, it's

We're following and doing it in the most efficient manner.

Yes. I think the, at least what I hear from our trustees is tell us your revenue trends. What do you think? So we're in a billion dollar campaign which is very ambitious for UH. How much are you planning to raise at the campaign's conclusion?

What do you think your run rate will be after you pass the $1.0 billion mark. So the kinds of questions we get are, is the income you're bringing in going to continue to raise to the level of your potential?

I get it. I think that's the big picture thing that you expect the board to do, but then somebody has to take the next step and say, okay, once you get the money, what are we doing with it? Right. And that's, I think the focus of this reso.

And that's where I think John's point about the money from, uh, dispersed to the University. This year It'll be over 75 million. Last year was about 60 million. So we're not just raising money for the University. The University is the reason we're in existence.

No, we get it, we get it. It's just a matter of then what are the controls of what it's being spent on? You know, because the University at the end comes to us below, we don't have enough money. And they're like, okay, well, why didn't you go to uh, Foundation?

Yeah.

Right. So I think that's when you take a look at all these audits. I think that those, that, that's the purview that we're looking at. Sure. Is how does it fit into the bigger picture? And I think we, we're trying, we're focusing on uh, foundation right now, but that's, that's what we're trying to get into. Right.

But good info. Thank you, John.

Senator Kidani.

Yes. Can you tell me if there has always been annual audits?

There is. As far as I can look back, we've had an annual audit, independent annual audit of the financial and the, as well as internal controls that are in place. And if there are any material weaknesses, those are addressed. And it was. Those things are brought to our board's attention.

We do have an Audit Committee, so any findings would be reported directly to the, to the board.

So is the audit conducted by the same Auditor?

Yes. Yes, it is.

You want to say who it's from?

It's a KPMG and we've been with them for some time, at least since I came back. And also our audited financials are, is reported to the University of Hawaii audit and it is shared alongside with their report

Available to the public?

Yes.

And so where can the public see this audit?

It is on our website, our University of Hawaii Foundation's Audit. So we do have the most recent, recent three years of audits on our website.

So when donors give donations, are will they receive a thank you letter for the donation?

Yes. And an official tax deductible receipt.

If they have asked it to go to a certain area of the University. Is that recognized in the letter?

Absolutely. So we have about 7,000 individual accounts that are all donor designated. And you would go into the account they specify, and. And then. And then those funds are expended in accordance with that intent.

So when the auditors do the audit, they look at all these different accounts and see that the donor's request were.

Yes, they do sample testing. Yeah. So they have a process of identifying material weaknesses. And when they feel that they need to take a closer look, they'll do samples and take a deeper dive into various different accounts. That includes the funds that came in and how funds are being dispersed.

Of the funds that you raise, you have a certain amount. What percentage of it is designated to an entity by the donor?

You mean so restricted for a purpose? Yeah.

7,000 accounts. But what percentage of that?

Almost all.

So almost all of it is designated.

So very, very little, I would say. And a little bit dubious about my exact number, but I would say 95% of the money we raised. 97,98, 99. Yeah, it's really high. The amount of money that's restricted for the purpose that. That the donor suggests.

Okay. So at the end of, so it's entirely dispersed every year except for that small amount. What happens to that small amount that's not.

Oh, the unrestricted amount. So the unrestricted amount goes essentially into a fund that goes to the greatest needs of the University, and we talk in conjunction with leadership. So, for instance, right now we're in this crisis with graduate student support, with the federal challenges we have. So I wouldn't be surprised.

Obviously, it's President Hensel who guides our decisions on these things, but I wouldn't be surprised if this year the bulk of our unrestricted money would go to support graduate students based on the. The shortfalls that we're going to be seeing.

So what, do you have a carryover every year of these unrestricted funds?

No, no, we spend those, yeah.

So you folks bought Atherton, right? So how did you buy Atherton? I mean, grant funds. So you have to get a loan, right? There was a loan, yes. And the assets are based on what to get the loan. What did you back it with?

There wasn't a collateral that I'm aware of, aside from the property. So this was purchased in 2017. I think it was first under discussion as early as 2016. And then I came into my role in 2019. So the property was already purchased with a loan, a bank loan.

But that's why I'm questioning how that. On what basis that purchase was made. Because now you, you initially bought it and leased it to the University, right? Yes and there was some concern that in order for the University to buy it, they'd have to come to the ledge. They didn't want to wait for the ledge.

They want to go through that. So they actually went to the foundation and you folks somehow created this, that you folks would buy it, you would lease it to the University to get around. I don't know if they would agree that to get around, but certainly it got around, around the Legislature looking at this property.

Yeah, well, my understanding is that it was important to the University when a adjacent lot came, you know, became available on the market, and then asked the foundation if it would make sense for the foundations to go ahead and acquire the property. And of course, our first.

Again, I wasn't in my role, current role at that time, neither was Tim, but how would it be used and what will it be used for? And so initially it was, I believe there were approximately 50 beds that were available in the YMCA building. And then you would add 50 beds to the inventory.

However, as the architects and the developers started looking into it, it wouldn't be as easy or cost effective to do so. And we had to go out there and think bigger and ended up with after 10 rise.

So. So the University goes to you because they thought they should get it. They got the lease and then decided that they couldn't afford the lease and so forth. And so then they walked away or did not do before on the lease agreement. And now you folks are in a P3. Right. It's not the University anymore.

Yeah. So this is, from what I understand, no P3s are alike. And so this one is with really four entities, if you will. We have the developer, UH Foundation, UH as a partner

And, and then what form are they a partner? Because according to Halbert, they don't have anything to do with it other than, you know, the housing hopefully will be, uh, students and that. I don't know if they would.

Well, he's a partner in the sense that the, the beds are available only to UH students. So, you know, if you attended another University, those dormitory rooms are not available to them. And we're partner in a sense that we are providing free space for the PACE program. So that's the way I look at it.

Okay, so you folks are providing this but UH hasn't put in other than the cost that they had during the period in which they had the lease. They paid for the security and the maintenance and so for that area. But it was supposed to be for affordable dorms.

And that never materialized because the cost and limitations on the property would not bear it. Plus they had asbestos in the building, didn't have elevators. There's a whole bunch of issues which should have been looked at prior to making decision, which it wasn't.

In fact, if I look at what was presented for that, they were comparing that property to parcels in the Manoa marketplace, which really, you couldn't compare apples and oranges because you didn't have parking. You didn't have all the kinds of things that the shopping center.

But they use the same CAM charges that they use to figure out what that income would be. And even based on that, it was like 20 years or 30 years before they would even see any profit. But so now the foundation has that property.

So if in fact things don't go well and folks are left with it who is going to be. Who's responsible for any shortfall that the foundation might have?

This would be the building. The property is collateralized, so in case of a default, it would revert to the, the lender.

The building revert to the lender. And what happens to. To the foundation as far as your, your role in that and what, what kind of costs or fees might be, or losses might be occurred incurred?

It would be the, the loss of the, the property and probably legal fees associated with that.

And how would you guys pay for that?

Could I say something?

Well, can you answer? The foundation, pay for any legal costs and other costs that might arise? Because technically you're just collecting donor monies, right?

For.

For the University, right?

Yeah. So as it relates to Atherton, if it go. The Rice facility, if it goes under, who would pay for that cost? I'm sorry, I just want to clarify.

I mean, you actually invested, right? You became an investor. Oh, I see it in the property and I'm used to building as a collateral. But basically it's all like you said, 99% of those funds are restricted. And even the ones not restricted is supposed to go for the University of Hawaii. Now you've invested in this building.

If it goes under or there's losses.

So the way that this was structured was, you know, this was for a lot of guidance from P3 experts as to how this should be structured. So really, our maximum loss is the, the building and the operation. So if the, the project cannot financially sustain itself and then you would. Oh and we.

Are we going to default? And then the property goes back to the lender and the lender essentially are the bond investors. And so we are in a way, the term that I've heard is that the LLC that we created to borrow the funds to build the building is bankruptcy remote.

And so really the collateral, which is a property is at risk.

Okay, so is that the mission of the foundation?

So the main mission of the foundation is to enhance and accelerate philanthropic giving. So the investments that we make in projects like this and in say the, the stock market. So we invest fairly conservatively. Our endowment is around $600 million.

The purpose of the investment Committee is to make sure that our return is as sensible as it can be. Could we get higher returns? Yes, but the investment Committee makes sure that we invest prudently in the same way. Your question about what if the project, the RISE project went belly up.

And while that is theoretically conceivable are the rate of students in the current dormitory. I think it's at 93%.

And so that we believe, and the foundation trustees did quite a bit of due diligence to make sure that this was a sensible bet in the sense that the study of student demand in that area suggests that we feel pretty good about that investment, just like we feel good about our stock investment portfolio.

Until such time the University gets its act together and we build the necessary housing that we should build and then those. That might change the whole scenario.

It would change the scenario. But I would argue, Senator, with respect, that what's different about the RISE program is the hybrid of having the live work study space.

Yeah, but that's not happening. Yeah, it's, I mean we've been there and from all reports that I get is that there's really not a whole lot of live and work and there because a lot of the students are not into that. But I don't want to, I don't want to argue that.

What's the return on investment on this? Is there a return on investment in ROI?

You mean in terms of the building or in terms of the stock market stuff?

No, the asset.

Yes. I don't have that number in front of me. I really have been focused on the day to day operations.

Any return on investment? My understanding is that it's not going to generate any income for many, many years.

Well, we have a big bond thing to pay off. That's correct. That's factual.

So it goes to your mission. And that's what I'm wondering as to, you know, whether you say you go into investments that are very safe, but aren't you supposed to also be generating stuff for the University and not right.

This project will generate revenue. It will just take time for us to stabilize

30 years from what?

I hope not that long.

But that's. That was the prospectus that we. That I saw in both cases when we. When, uh, was going to do it and then when we focused it.

Go ahead. So does the foundation have more than one bank account?

We have multiple accounts, yes.

And those accounts, you have multiple accounts for various. What the donors want or.

No, that. That those donor accounts are managed in our financial system to segregate the accounts and to keep track of the donations coming in and expenses going out. So that's handled through our financial system and that's.

How is that made available to the public, the information as to if they want to give what kinds of accounts that you have available to you?

Yeah. So that is on our website. So there are a number of different ways they can search and make a donation from the program that interests the donors and make a donation that way. And then also maybe Tim can talk a little bit about.

We do have a lot of our staff who have regular conversation and discussions with our donors and our academic partners on some of the different areas that a donor may be interested in supporting. And then if needed, we'll create a new account for that.

So when. When the donors make a donation and a. Is a thank you letter generated to the donor and to say thank you for your donation to this. Whatever it was they wanted. Yes. And that the donation was made to them.

Yes. Thank you.

One more question. So has a performance audit been conducted before?

Yes, in 2004.

2004.

Okay. I think I had one more question, but. Okay, thank you very much. Next item is SCR 193 and SR 173. Before I go on there, I just want to note that there was an SCR for this past resolution, SR 154 for some reason. Yes, it's SCR 137, but it's SR 154.

And somehow it's the same exact wording, but somehow got left off, but we'll deal with that, that entity, that concern as we move forward. So SR 173, SCR 193, requesting the University of Hawaii Community Colleges to develop a comprehensive list of bachelor degree programs that directly aligns with the job opportunities and industry needs within their respective region of service. We have Della Teraoka.

So we have submitted some comments. We had some ideas for a possibly different approach, but we're happy to do as the resolution recommends, and I stand on my testimony if you have questions.

So, Christian Fern? Why don't you sit there Della,.

Nobody else is here.

No one else wishing to testify. Anyone else wishing to testify on 173 and SCR 193? Okay. So what would your way be?

Oh, well, we were just, if the focus is on the community colleges generally, we do not host as many bachelor degrees. And so we would be looking at a more comprehensive approach at what are the workforce needs. And then maybe it's certificates, maybe it's associates. Possibly a bachelor's degree.

It would just, you know, be looking at everything instead of just the bachelor's.

Okay, well, there's nothing preventing you from doing that.

No.

So you want us to add the language to put that in there?

Either way is fine.

So we're comprehensive. What exactly are comprehensive?

It was in like the next to the last paragraph.

Reconsider the approach.

Sure. A full spectrum of workforce development pathways. How about that?

Okay. Question. Senator Kidani.

I guess I'm just wondering that if there were bachelor degrees in these areas, would you be attracting more students? Has not the student population declined over the years?

I think it's definitely become very specific to the jobs, right. So there's certainly some areas where the number of students has declined, and then there's those high demand jobs that we can't seem to keep up with. So I think that's what we'd be looking at is those areas where there's a high demand. We wouldn't create a bachelor degree program if it was not something we thought we could sustain.

Okay, what kind of cost you would have to implement.

So we have a couple of our community colleges that have third year programs already, so the cost would not be significant. And I've been told by the chancellors that they, they can do it with what they have, they could add the fourth year. If we were going to stand up something completely new that would be more costly.

Okay, good to know. Any other questions? Thank you. Okay, and finally, we are on SCR 192 and SR 172, requesting the University of Hawaii system to establish a Veterinarian Medicine expansion working group to explore the feasibility of developing a Doctor of Veterinary Medicine program at Windward Community College. And testifying by that is Deborah Halbert.

Good afternoon again, thank you for the opportunity to testify. We stand on our written testimony. And I would just note that Windward Community College is currently not accredited to offer doctoral degrees. But we could certainly get a working group together to talk about the scope of veterinarian sciences more generally across the system.

Okay, stay there because you're the only one that signed up in person. Although we had a number of people in support and we had a couple people opposing this. Members, any questions? I guess I have a question again. This is not my resolution. So is it only a Windward that. Okay, maybe I should ask this.

So where do you have the veterinary medicine program right now?

So Windward has a vet tech program and they have a facility for that. Otherwise, at Manoa, there is a pathway to becoming a veterinarian.

But as we noted in our testimony, if you want to get that higher degree, you would need to go through the Professional Student Exchange program which Wiche offers and go to a veterinarian school somewhere outside of Hawaii.

And I was just talking with Dean Gerwal up in another meeting earlier, just before this meeting, and he noted that it is very competitive to get into vet school. There are not that many across the country. And so there would be very significant interest if we were to establish a veterinarian school here.

Then the question becomes, and this is why having a more comprehensive analysis might be useful if that would be better targeted towards large animals or cats and dogs or some combination.

And that was also why the recommendation to include Hilo in a working group, because they of course have their own AG program with other animal science components to it.

Okay, this kind of reminds me because I'm looking at other testimonies who said that while right now there's not enough, that there's a lot of schools that are embarking on the program.

Oh yeah. And we would need to do that kind of analysis if we were to before making a recommendation about standing up anything this significant.

Yeah, so apparently there are number of schools ready to going to be coming online. And that's exactly what happened with pharmacy school. There was a need for, you know, we have a shortage of pharmacists and so we put up this whole school every the first year. Yeah, we got, you know, a number.

We were able to fill it, but now we're down to like 50%. Right. Of. Of.

And I could be wrong, but I would imagine also some of the economic landscape for what happens in the field would be useful. I know that for example, vets have been taken over by hedge funds in some cases and that systematically restructures the way that they are doing business.

And I believe something similar did happen in pharmacy as well. And so we would want to be very careful about what the landscape is for where these individuals would go post graduation. And some of that is potentially anticipated and some would potentially not be.

They also said average established DVM programs cost roughly 60 to $89 million per year to operate. Yeah, they raised that issue. So that's something that will be, will be looked at and evaluated during this working group. It would have to be. There's any other questions? No, thank you. Oh, I know I have one more.

So there's no other campus that has anything?

There's animal sciences programs, but no vet specific.

Okay with that, members, I'm going to go into recess.

Want to call back the Committee on Higher Education to order. We have conferred, the committee has conferred and the recommendations for the resolutions are starting with Senate Concurrent Resolution 50 and Senate Resolution 32 urging the University of Hawaii President and Board of Regents to establish a Bachelor of Science and Nursing program on Maui campus.

The recommendation is to pass as is. Any discussion Members? Hearing none.

[Roll call].

Thank you for SR 160 and SCR 142 requesting the office of the Auditor to conduct a financial and performance audit of University of Hawaii at Manoa Athletics. The recommendation Members is to pass with amendment taking the testimony from the auditors by narrowing the scope of the audit to audit the Athletic Direct Departments using department's use and management of its funds and assessing whether the Department actual expenditures are consistent with its policies and procedures.

So it would essence be a performance audit and not this and not not a financial audit per se. Okay. Members, discussion, hearing none. Chair votes aye on with amendments.

SR 260 and

No, 160.

I'm sorry. SR 160 and SCR 142.

Correct.

To pass with amendments. [Roll call]. Measures adopted Madam Chair.

Okay, thank you. And for SR 155 and SCR 138, requesting the auditor conduct a management and performance audit on the Vice President of Academic Strategy for the University of Hawaii. Again, we're looking at more of the performance audit and that the other amendment is removing subsection 4, on line page 2, lines 27 and 28 in the first be it resolve section the design, implementation and effectiveness of performance metrics and in measuring program success.

Any discussion Members? Hearing none, Chair votes aye to amend Senate Bill 15. I'm sorry. Senate Resolution 155 and Senate Concurrent Resolution 138. Amendments. Yes.

[Roll call]. Measures adopted.

Thank you. On Senate Resolution 54. This is requesting the auditor to conduct a performance audit of the University of Hawaii Foundation. The recommendation is to pass as is and noting that the SCR will be reposted, will be not, will be posted another date because it was left off.

This is a, oh no, this is nothing. It is, this is 154. But it does have a [unintelligible]. Okay, so SR 154, the recommendation is to pass as is. Any discussion? Hearing none.

[Roll call]. Adopted Madam Chair.

Thank you. SR1 73. SCR 193. This is for requesting the University of Hawaii Community Colleges to develop a comprehensive list of bachelor's degree programs. And the recommendation is to pass with amendment to enter the language we talked about, non broadening scope and technical and non substantive amendments. Any discussion? Hearing none.

[Roll call].

I'm sorry SR 173.

I'm sorry. 173.

and SCR19. Small dividing. Senator Kim I. Senator Kidani I. Senator Fukun. Excuse. Senator Hashimoto, Senator Pavel. Excuse. Adopted. Madam Chair. Okay, thank you.

and SCR 193.

[Roll call]. Adopted Madam Chair.

And on SR 172, SCR 192 requesting the University of Hawaii system to establish a Veterinary Medicine Expansion Working Group to explore the feasibility of developing a Doctor of Veterinary Medicine Program at Windward Community College. Recommendation is to pass as is.

SR 172 pass.

and SCR 192.

Pass unamended. [Roll call]. Adopted Madam Chair.

I just want to add that we'll put in the committee report that the community colleges are not necessarily authorized to offer doctoral programs as stated by the University, but the need for a system wide approach going forward. So with that there are no other business. This Committee is adjourned.