Senate Standing Committee on Education

That was a call to order. So calling to order. The joint Committee on Community, Committee on Education and Committee on Economic Development and Tourism. Today's Wednesday, February 11th. We are in room 229 and this hearing is being streamed live on YouTube.

If the hearing is abruptly at end due to technical difficulties, committee we will convene on Friday, February 13th at 1pm in Conference Room 229 with a notice posted on the legislature's website. And due to the number of measures and due to Monday's cancellation of all our committees, we had to juggle everything around.

So you will be given one minute to testify. I hope you will understand that. And if technical issues arise during your Zoom testimony, committee may need to proceed to the next testifier. Written testimony is on file and appreciated. So we have two measures on the joint agenda starting out.

And I want to welcome our Committee on EBT, Chair Linda from Maui, my vice chair, Senator Kidani and your vice chair, Senator Wakai. Okay with that, Senate Bill 3263. First up for University of Hawaii, Matt Elliott. Good afternoon.

Excuse me. Good afternoon. Chair Kim, Chair DeCoite, Vice Chair Kidani, Vice Chair Wakai and Members of the Committee. I'm Matt Elliott, Director of Athletics. Thank you for the opportunity to be here. I'm representing the University of Hawaii Athletics Department. We are in support of bill SB 3263. As we know and we've talked about at length.

NIL is a new challenge for college athletics across the country and in this state. And we believe that it requires a range of solutions to be able to successfully take this on. We've requested made a budget request to help fund the NIL program going forward.

But this endowment program that is outlined in this bill we think makes a lot of sense because not only does it allow us to emphasize the importance of keeping up with the current athletics landscape, but it creates a long term sustainable solution as well.

So while we do still believe that it's important to have immediate short term funding, this endowment is something that makes a lot of sense for us in the future. We have recommended a few modifications with the Bill and those modifications are in our testimony.

But in short, just the request that if the endowment could start at a lower amount, maybe a 2 million total amount instead of 10 million to at least allow us to get started before we're able to raise the full 5 million in matching that is articulated in the bill currently, that would be wonderful.

Second, we've asked if we could in the reporting requirements, not submit individual student athlete data, but aggregate that across teams that would be ideal. And then our third request is just that if a student needs an agent, then the agent should be certified.

But allow students to choose not to have agents because some of our student athletes choose to do this on their own and don't need that. So thank you very much and I'm here for questions.

Okay. Why don't you sit there? Because I don't have the rest. I have Glenn Morimoto is an individual opposition. Carlos Santana in support. Sean Spencer comments and Kyle Orr in support. Anyone else here wishing to testify on this measure? Okay. Hearing none. Members, questions? Senator Kidani.

So is prepared to do its part in meeting the dollar to dollar agreement.

That would be- We- We would work on that. We- It's a. The way I understand the bill.

To make that happen.

Yeah, I think we have to do both. We have to raise money for the near term that we can use to fund NAL expectations right now. And then if this bill exists and creates an endowment or if this endowment fund exists, then we would also be trying to raise money to do the matching funds as well.

So how would this work? The $2 million as opposed to establishing the 10 million? How do you see that work?

Thank you.

I was kind of contemplating that if the state, if we were able to raise a million, for example, and the state had a million, then the fund would start with 2 million and we could start getting the interest from that 2 million. If we have to wait until it's a full.

And what's the interest in between?

Well, I understand it's probably 4 or 5% only on that. So it would still, you know, maybe 100,000 a year or something like that.

Okay. Any other- Any other questions? Senator- Senator Fevella?

Yeah, so my question would be, is we going to implement this? Are you saying $2 million? You guys got a whole collect interest, whatever. What is the guarantee that we're going to be able to keep these students going forward?

I mean, I understand you guys talking about how great this thing is, but we're a small island with poor taxpayers with little money. How are we going to compete with the bigger colleges if they decide to put themselves in a por- in a portal? I mean we're going to spend money on these guys come and then they will leave.

How is that going to be secured for the taxpayers going forward? Because not everybody is into taking their taxes and giving it to the university for something like this.

And the reason why I say that because I have a lot of backlash in my community because they don't support it because we have poor people in my community that taxpayers are struggling and we're going to fork out $2 million. You just said now, so clarify if I'm wrong.

You said you could take the $2 million, anticipate you guys gonna raise some funds and then get some interest off the $2 million will sit there. Well, that $2 million can help other programs and other places within the state. And right now we're short.

Now we're going to tell the taxpayers now we're going to renege, giving them their tax break because we can't afford it. But then we're going to give you $2 million that you can put on the side to collect interest. I mean if that's what you just said, I'm not sure if that's what you said.

Initially you needed 10 million and 5 million, but now you guys willing and dealing to just to take anything that you guys can get for us to do the startup funding for this program.

Why not have a university come with skating again to start up your own program and then come back to legislation and say we started this program pretty successful. Can you help us out?

I agree with what you just said because I think that's exactly what we are trying to do. We- This year, we are doing the program without any state funding and our goal is to try to raise 3 million for the NIL program just based on private funding.

So that's the first step which sounds consistent with what you're asking us to do. Then if I understood the bill correctly, it would be to create an endowment for long term investment in NIL. And what we were trying to say is if the state puts up a million then we would try to raise a million.

Because I think that's what the structure is. If I'm wrong, I apologize, but that's what I thought the intent was.

Let me just clarify. This bill is not a university bill. This bill is our bill that was introduced and it was done so that there would be a pot of money that would be consistent over the years. Because you cannot touch the corpus of the endowment. You have to leave it there.

Instead of giving 5 million every year to them, it would be a one time 5 million and the requirement is that they match the 5 million. So there would be 10 million in the corpus and then they would get the interest from that going forward.

As long as there's such a thing as NIL at such time that NIL does not exist, then the money would be reverted back to the state.

Thank you, Chair.

Just so you understand, Senator Wakai.

I'm trying to understand the magnitude of what the ask is here because I mean $10 million seems like a lot of money, but in reality it's not a lot of money. When the University of Texas pays Arch Manning $6 million, poof. It's gone with one kid in one year.

No matter how much money we give you, are we ever going to be competitive with like the power five kinds of conferences? Are we just throwing money after hope that we are going to be kind of mediocre in the grand scheme of athletics?

That's why we have set our target to be the best we can be at the level that we're at. As I don't think of it as mediocre in athletics. I think of it as being very successful in the Mountain West Conference, the Big West Conference, the teams that we play against.

And because of the way college sports is structured, if you do really well at the level that you're at, it does give you opportunities to go on and compete at the highest level. So we all know how wonderful our men's volleyball team is when they do really well in the Big West Conference.

They compete, qualify for the national championship. And we can win national championships. So we're not asking to compete at that level. I agree. We're not going to pay one player $6 million. That's not the right solution for us.

Can you give me an ideal? I mean, your highest valued UH athlete the past year was Kansei, your kicker. Can you disclose to us what is his NIL deal?

Um, I have not. I don't think we've disclosed publicly any of our individual student athlete deals.

But if we go down this road of using taxpayer funds, I think the public has every right to know how much we're paying for whoever doing whatever.

Yeah, and I understand that. And that's where I guess we've asked for the modification that we would disclose that by team as opposed to as individual students. I think that is the standard nationally.

But if that's not where we are, then I understand if the money- if- if the money from the state comes and requires individual disclosure, then, you know, we would have to make that choice. I guess I just don't know exactly how the privacy rights work for individual students.

I just wanted to use Kansei as an example because I'm trying to understand we're not going to be paying $6 million for a quarterback. But Kansei's deal gives us kind of an idea of like, did he get $10,000? Did he get $50,000 so that we could kind of right size this appropriation as well?

Because if his NIL deal is small, then maybe we don't need to give you 10 million bucks, right?

Okay. Yeah. I mean, I guess that's where I would say, collectively, we are trying to raise $3 million for our entire athletics department for this year. And then our target was to have $5 million for next year. And that's why we made that budget request. And that would be across all of our teams.

So that is the broad scope of it, and we've provided, you know, breakdowns by team of how we would intend to use that as well. But I'm not- I don't think I'm in a position to be able to disclose individual student athlete privacy information like that.

Is it my recollection for the moment, you don't have to give NIL money to foreign players, only American players or US Citizens, right?

No, we are allowed to give NIL money to international student athletes as well.

In your testimony, you had stated that you folks are going to need to take time to raise those kinds of funds, to match the funds.

And so I find that to be kind of contradictory because you're asking taxpayers for 5 million now and then, but you're not really giving us a clear plan on how the university is planning on raising its funds with the urgency.

So instead of giving us a plan on how you folks are going to be raising funds in an urgent way, you're asking us to scale back on the threshold.

So- So the concern, and I think to Senator Favella's point as well, in addition to taxpayers, is you're asking them to front the cost on this, while hopefully you guys can raise the money without any clear plan. So- So when you say take time, how much time are you guys going to need?

Well, just the reason I think that is because we've been trying to raise money to pay our obligations real time. So that's- Those are the conversations. That's the kind of fundraising we're doing right now. This is a different concept. This is a concept of raising money for an endowment.

So to talk to donors now about we need money, or we're asking money from the private sector to put in an endowment that will then generate some interest, that's just something new. This is a new proposal that has come in this bill, and it's different from what we've been focusing on.

So that's why I'm saying it would take us time to raise 5 million for an endowment purpose.

So are you finding it to be a hindrance to now you guys raising money just because it's an endowment?

No, I'm just saying it's different. We've been focusing on, again, the target was to try to raise 3 million that we would spend this year for our NIL obligations across the department. So that's what we're doing. That's what we've been focused on.

Do you guys have a plan to raise the money?

Yes. I mean, we're as I think we've stated before, we're over 1.6 million in terms of trying to get to that 3 million total for this year. So we're working on that.

But you're not right now, there's no difference in plan on how you guys expect to raise the money, especially if we're asking you to match the funds.

For the endowment, no, we don't have a plan to raise the endowment funds yet. That is a new concept, as I, you know, we need to work on that.

Okay. Thank you, Chair.

Okay. You said. I'm sorry. So it's a new concept, but raising money is raising money, whether it's for an endowment fund or not. It's for NIL. You've been asking for money for NIL.

You just had a regent board member that put a million dollars into an endowment fund.

Right.

Right.

So it's not a new concept. I mean, if people are willing to put money in for an- for NIL, whether it's an endowment or not, and if you're still raising money for this year for 3 million, that means you have no, you're not raising any money for future years.

So, I mean, to me, that's not going to be sustaining at all.

Right. And--

So if you can't raise the money, I mean, and that's the- that's the incentive is that if you want- if you want the 5 million from the state, you have to go out and raise it and you have to match it, and then you guys can use the funds. Senator.

So my question is, it's been a long day. How many student athletes do you guys expect to participate in the NL?

NIL. That's a good question. Yeah, I mean, we're probably in the 60 to 70 range right now. It'll go up, though. I think I would guess over- over 100. Next year is probably more likely.

So I know that you asked to drop the 10mil to 5mil in the endowment for the matching.

Right.

So if I- I did 5 mil and I looked at, say, on 5% interest, you're looking at $250,000 off of 60 players. It's kind of small. Yeah.

Yeah.

And that would be adequate.

No, that's why I think this is just part of a range of solutions. We need dollars that we can spend, real time every year. So that's what we are doing with the private sector. We had also asked for the $5 million from the state, which was, you know, to put into the budget that we could spend.

This endowment concept, I think is another good concept because it does help create some long term sustainable funding that if we can grow to a place where we really are much more self sufficient, this could help us solve, solve these demands.

So how does this, the endowment fund compared to other comparable colleges with a Division 1 athletic program? What's the comparison?

That's a good question. I- I'm not aware of a- of a state match endowment fund. I haven't seen that. It may exist, but I haven't seen that in other places yet.

So of the other, because I know you guys have partnered with some of the Hawaii restaurants and stuff. Those funds that you guys raise, are those funds also used or will possibly be used for matching funds as well, or are those separate? Because I know--

We talked a lot about nutrition for the players and so forth.

Right.

Yeah.

You guys looking at some of those funds as well to be part of the fundraising?

If I understand the bill, the bill said we had to raise matching funds explicitly for NIL for this endowment. If- If that's able to be changed, then obviously I would be very happy to look at other endowments that could be used to match this.

Thank you. Thank you, Chair.

Other colleges, any of them use state funding for NIL?

So this is again, I think the way public, many public universities are functioning right now is that they, either the university, the state, whatever their concept is- is helping them put together the budget for NIL.

But we've seen a wide range of schools commit to the cap of the NIL funding, which is the $20 million you can go all the way up to even with a stable budget, even with a balanced or a budget that had losses.

So what we will wait to see, because your question is very fair, is how does that play out at the end of this year? Nobody has done this before. This is our first year.

My question is, are you aware of any school that is using state dollars, come to the state Legislature and ask them for NIL money?

I'm not aware of anybody else doing this proactively like the way we are.

From what your President, President Henslow have said, is that very few, there's not a whole lot of colleges that actually get the kind of state money that University of Hawaii has that we give.

And I would take her word for it because she's been in a number of positions at different Universities that we tend to give more money. So I can't imagine how those states or colleges would be given state monies for particularly NIL when they're not even giving it to the institutions.

So this is really the fact that we're taking state dollars and using that money to help this. There are a lot of people out there and I've heard from a lot of constituents who are not in favor of using state dollars for NIL to give monies to athletes at this point.

So this is kind of trying to balance it, to give you folks some startup so you can start to raise the funding. But again, it will depend upon how much money that the university can raise. And again, that's your position. Right.

The athletic director has that responsibility to- to raise or to be the leader in raising the monies that is needed for the athletic department. Let me just ask you on the other issue on- on the agents.

So you're saying that these athletes should be able to do this completely on their own and not have an agent or a parent?

I think it should be their choice. That's all I'm saying. Yes.

So. And again, we're trying to protect the student.

Because you're talking about we could potentially thousands or millions of dollars right to a student to not have any kind of guidance. Anybody that's going to be looking after their best interests at this point in time, I find that very difficult to do.

Absolutely.

I think agents can be excellent resources or lawyers or whatever student athletes want to use. All I was suggesting is some of them, an NIL deal might be $1,000 for the whole year.

Right. And that's why we say-

And to force them to.

Or a parent or a guardian, at least somebody there to. That's what the bill says.

Great. Yeah.

And then finally, any state monies, I think the public has a right to know where the money goes. Whether it's by an individual, I mean even foundation. We ask them to disclose where the money's coming from or where the money's going. Unless they say that it is, they want to remain confidential, then we don't know.

But technically it's state money.

Yes, I think the. I understand your point. And if the State Dollars require that kind of disclosure. I understand it. I just am asking or suggesting a modification that doesn't require us to provide or to produce the individual student information. That's all.

Okay. Any other questions? Senator Wakai.

I know you just completed your deal with the Mountain West. What's your take on that? How much is university getting out of that contract?

So the intent as stated by the commissioner. The intent is to keep the distribution approximately the same across the board from what we receive from the Mountain West or what schools receive from the Mountain West. So that's that $3.5 million target. What is different is that our relationship based on our contract was our local TV rights deals.

Local TV rights deal was part of that three and a half million in years past. So we are now in a space where we will get the conference distribution, which hopefully is that number. And then now we are negotiating a local TV rights deal.

And that will be on top of, as opposed to being taken away from or balancing out the meteorites deal. So we have the chance to go additional, get additional resources.

Is there also additional potential with the games that are not going to be covered by the Mountain West deal, nor a Spectrum or whatever local deal?

There's going to be a lot of games that the university could just stream and somehow monetize and perhaps use your own journalism or communication students to get, get even more money to help with the match in this bill.

Yes, those are, all of those games are part of the- either the Mountain West deal or the local rights deal. It's not- there wouldn't be a third avenue for that. The rights already fall within one of. Will fall within one of those two deals.

Right. But let's say it's a girls softball game that neither the Mountain West deal nor your Spectrum contract covers. You could stream that to whoever, wherever the audience is and monetize that, couldn't you?

No, that will go through the Mountain West app. Because they have the right to all of our sports. Yes.

Whether they're broadcasting it or not?

Yeah. That's what this fourth. That's kind of this fourth part is the- the Mountain West app. So anything that we can do locally, we will do locally. Anything that we would do on our own, we would then put up on the Mountain West app.

Senator Kim, question.

Yes. So what percent of UH athletes are- that are funded, are local?

That are funded are local? I don't know. I think about 30%, if I understand correctly. About 30% of current UH athletes are from Hawaii. That's my understanding.

30%. You're asking what percent might be- Might be eligible for getting this NIL?

Yeah. They would all be eligible. In terms of who's getting it right now? I don't know that, but I can find out.

Yes. Appreciate that. I have one last question. It kind of deviates from this, but you have a media- a media agreement contract and I have my notes and I'm not sure what I did with it.

Oh, our multimedia rights?

With Learfield. Yes, that's right.

Yes.

You have a consultant. What does that consultant gets paid? Or the person that's doing the contract?

Oh, the- the consultant that negotiated the previous deal, you're asking?

Oh. Or the people that are doing the contract, what do they get?

No, I'm working on it right now. We don't have a consultant.

You have an agreement, though, right now?

No, there was a deal that was negotiated when the last deal was negotiated, there was a consultant that worked on that deal. There is no consultant working on that deal.

What is the deal? How much the people who we have that deal with makes?

What was the total amount of that contract? I don't want to speculate. I can get you that.

Okay. I'm sorry. I have my numbers because my understanding the guarantee is- is low and the amount to share is really high. It's almost unattainable, which raises a question as to exactly how much that they're getting and how much is the university actually getting?

Oh, you're asking about that? The split with Learfield, with- with the actual third party? Yeah. Oh, yeah, we can give you that. There's a- Every year we know what we get is, it's in the contract, there's a guarantee. So this year it's around 2.8 or 2.9 million.

And then we will know at the end of each year what did they actually generate.

So they, according to my understanding, is they get anywhere from approximately 75% and we get 25%. Does that sound correct?

No, that's not correct. I know that's not correct.

Yeah. Okay. Well, I took the numbers that you guys gave me and I did it. I'm sorry I had to work, but I think that's relevant in the sense of where is the money going?

Right. Oh, absolutely. And I think that is a really important thing for us to be paying very close attention to. And that's why we're now starting the process of negotiating the next version of this deal. Because this deal will expire in a year and a half.

Okay. Because it's 2.5- 2.5 million, and for 25-26 is 2.8 million, right?

Yep, 2.8. I think that's the guarantee this year. That's right.

And so the revenue sharing, though, threshold is 5.8 million, which the chances of meeting that is very.

Yeah, we're not getting there.

Right. We've never gotten to that number.

So I guess we. The question is, what are we paying this entity in order to get the $2.8 million.

Oh, right. So we don't pay them anything. They negotiate all the third party deals. We get the guarantee, then we get the trade. So our trade is also close to 3 million. So it's the 2.8 plus 2.7 or whatever in trade.

And then they keep a portion of what they negotiate on top of that until we get to that 5.2 or whatever number you're- that number that you're talking about.

Which you don't very rarely will get.

Right. We won't get there in this deal. And that's why we're going to negotiate a new deal for next, starting next year.

The question is, how much is the negotiated deals and what percentage of that deals are we actually getting versus what they're getting?

Yeah, okay. That- That we can get that breakdown for you.

Okay. Because the profit sharing line will never be reached.

Not in this deal. No.

Members, any other questions? Yes.

Matt, would you say that you folks are pretty much maxed out on your fundraising efforts? Like you've exhausted all resources, made as many calls as he could, and it's like if anything comes through, then cross fingers, hopefully maybe we'll get a check.

No, not at all. I think we are at the very beginning of rebuilding a fundraising mechanism. We have great support from the foundation, but what we need to do in athletics has a structure where we take all of the different entities. We have booster clubs, we have other third parties that work with us.

We need to bring that all together. We have to have a system for how we engage with our donors. We have- There are so many calls we still have to make. So I think we're right at the very beginning of this, not anywhere near what's next up.

Okay, so if you feel like you're in the beginning of your fundraising efforts, then why can't you match the funds? Why are you asking the tax. Why are you asking us to scale back if you think you guys are only in the beginning? So you folks have raised 1.6 million so far?

For NIL.

For NIL. So being that you guys are just in the beginning, shouldn't you feel confident to know that you guys can match the funds?

Well, I was just hoping that we could get it started the way, again, I may have misunderstood the bill. The way I understood the bill was that if we raise 5 million, the state will then put in 5 and we'll have 10. So my thought was it's going to take us time to get the 5 million endowment.

Could we start at 1 in 1, if we can start at 1 and 1, at least it starts generating some interest. That was the only proposed modification, but if that's not agreeable, then I understand.

Yeah, because you're expressing that it's critical to the NIL program and it's crucial that we get this $5 million, yet you guys aren't willing to have any skin in the game as far as putting your best efforts forward. So during my initial question, you had said, we're just at the beginning.

Okay, great, then you should be able to sell us and close the deal and let us know, you know what, it's going to be rough, but we can do our best. We're going to match it and yeah, let's sign off on it, let's go for it.

But you're not really giving us any kind of faith that you guys are- are able to match this, but yet taxpayers got to front the bill on this.

Okay, yeah, I'm sorry, I'm not giving you any faith. I think we have to raise money aggressively to cover our obligations right now. So that's, you know, trying to get the 3 million in NIL, trying to get additional dollars for operations, another 2 or 3 million to cover our operations.

So those things are real time to make sure our budget is balanced this year. In addition, now to raise $5 million for an endowment for NIL will be another- another obligation for us. So all of those things combined are absolutely us going all in to try to accomplish them.

And if- if we- if the endowment doesn't kick in until it hits 10 million. I understand. I was just saying that maybe as part of the solution, we could start it sooner.

Okay.

I just want to make sure the program understands that on the ledge side, we're willing to work with the program if in the event you guys can match the funds, but you have to be able to meet us at that level instead of just, oh, well, we need more time, like, okay, well then the $5 million you're asking us to front you guys, but then you're only willing to maybe invest or maybe committed to a smaller portion of that.

So- So that was basically my point is we're screaming that this is existential and this is critical, but that yet when we ask you guys to participate, then it's like, oh, well, hold on, we need to pull back a little bit. So there's just a little bit of a contradictory conversation that's happening.

And I don't think that taxpayer payers should be putting up all the costs. And you guys are playing the safe route. Taxpayers are not paying the safe route. So that's my comment. Chair, thank you.

Okay.

I want to just caution you when you say limited a million, if you're- if there's no guarantee that after that 1 million you're going to get the other 4 million. That's how the budget works. You get it when we pass it next year. Come we may not have any money to give.

You may, you might not ever get up the 4 million, other $4 million. Are you aware of that?

Okay.

I was wondering if we could do it as a, a minimum of two up to 10, you know, something like that. That's what I was.

But you got to understand the legislative process. We work year to year. So we either give you the money now and you raise it and you match it or you don't get it. And there's no guarantee you're going to get anything done next year. I'm just saying that's just how it goes.

So you have to be strategic in how you folks propose some of your proposals. Because yeah, if you ask for a million and you're going to raise a million, then there's no telling next year if you're going to get anymore. Then another bill might have to come, have to be done. Right. I mean there's no guarantee. So.

Okay, thank you.