A proposal to limit how the University of 91直播 can manage its student tuition and student fees was significantly scaled back Tuesday following concerns from UH officials and lawmakers, including House Higher Education Chair Andrew Takuya Garrett.
Major amendments adopted by the House Finance Committee on Tuesday removed key restrictions from Senate Bill 2602, shifting the proposal’s focus to a more flexible approach.
Language that would have prevented UH’s 10 campuses from sharing tuition revenue across the UH system was removed from SB 2602. The original proposal would have restricted campuses to spending only what each generates from tuition and students fees, and required that any excess revenue after 2029 go to the state general fund.
But Tuesday the proposed annual sweep of excess tuition and fees in SB 2602 was amended to a one-time transfer in 2029.
“It’s just not pragmatic … to be able to spend down the excess by the end of each fiscal year,” said Rep. Garrett (D, Manoa).
Too many variables, including ongoing expenses and long-term projects, make yearly reductions unrealistic, he said, giving the university time to reduce its reserves on its own.
“The ball is in their court,” Garrett said.
Concerns raised by UH officials during an earlier hearing and in written testimony drove many of the changes Tuesday.
“This bill requires that funds … should be allocated and expended solely for the benefit of students at the campus from which the funds were collected,” UH President Wendy Hensel and Chief Financial Officer Luis Salaveria wrote in testimony, warning it could result in “the loss of significant funding.”
University officials also raised concerns about redirecting the reserve funds.
“The provision of the bill which sweeps the University’s unspent tuition and fees revenue to the general fund is inconsistent … for the benefit of the students who paid them,” UH officials wrote.
The Tax Foundation of 91直播 had argued that UH had “hoarded” nearly $429 million in student tuition and fees as of June.
Funds above the university’s reserve target would still be directed to the state if left unused.
“If they allow this money to balloon further, then that would be to their own peril,” Garrett said.
Another amendment to SB 2602 removed a fixed reserve cap, instead deferring to the UH Board of Regents to determine appropriate reserve levels.
“I don’t think the Legislature should be in the business of dictating what that percent ought to be,” Garrett said.
UH officials pointed to ongoing financial uncertainty tied to federal policy changes as a reason to protect existing resources.
“The financial effects of the federal changes are significant and warrant careful safeguarding of all existing University resources,” they wrote.
SB 2602 comes as lawmakers also look ahead to projected budget challenges in the state, including a potential financial “cliff” in fiscal year 2030.
“This is one such vehicle just to potentially plug a hole if it comes to it,” Garrett said.
Still, concerns remain that the reserves have grown beyond what policy requires.
Federal funding shifts and pandemic-era money were cited as factors contributing to the buildup.
“There was a lot of federal money that came in during COVID,” Garrett said. “All this money kind of got pumped into the UH system.”
Some lawmakers view the proposal as part of a broader effort to monitor large special funds.
“Anytime there is an uncertain fiscal climate, the Legislature is going to look at the balances of all these various special funds that are out there,” Garrett said.
Garrett acknowledged the changes made to SB 2602 on Tuesday in the House Finance Committee differ from its original intent.
Differences between the Senate and House versions of SB 2602 will now be worked out in conference committee.
“This is far from a done deal,” Garrett said.
