Board of Regents UNIVERSITY of HAWAI 1m SYSTEM July 10, 2020 MEMORANDUM TO: Board of Regents University of Hawai?i FROM: Benjamin Kuwait}? Chair, Board 0 gagents SUBJECT: Resolution 20-03 and Letter to Governor Regarding Impacts SPECIFIC ACTION REQUESTED: It is respectfully requested that the Board of Regents ("Board?) consider and approve the following items: (1) Board Resolution 20-03, Proclaiming an Emergency and Directing Action by the University of Hawai?i (?University?) Administration in response to the pandemic; and (2) A letter to the Governor requesting that negotiations with relevant public employee unions take place to defer pay increases and adjustments until the State is in a better economic condition. BACKGROUND: The pandemic is constantly evolving and requires the University to be expediently flexible in taking necessary actions to mitigate its social and economic impacts. Although the Board approved the establishment of a permitted interaction group (?Task Group?) to investigate issues and make recommendations related to the University?s strategic response and economic recovery from the Task Group is constrained by statutory time and process requirements. In my capacity as Board Chair, I am requesting the Board?s favorable consideration of the attached Resolution 20-03 and letter to the Governor which requests that urgent action be taken in a timely manner. ACTION RECOMMENDED: It is respectfully requested that you approve the attached Resolution 20-03 and letter to the Governor. Attachments: Board of Regents Resolution 20-03 Letter to the Governor 2444 Dole Street, Bachman Hall 209 Honoluiu, Hawai?i 96822 Telephone: (808) 95643213 Fax: {808) 956-5156 An Equal Opportunity/Affirmative Action Institution University of Hawai’i Board of Regents RESOLUTION 20-03 Proclaiming an Emergency and Directing Action by the University of Hawai’i Administration WHEREAS, the recent onset of the COVID-19 (“COVID”) pandemic has engendered major and significant adverse challenges to institutions of higher education in the United States, and has correspondingly generated severe negative effects and extraordinary uncertainty upon the economy of the nation and Hawai’i; and WHERAS, in Hawai’i, the COVID pandemic resulted in the abrupt shift to online learning and a predominant work-from-home modality in educational institutions such as the University of Hawai’i System (“University”) since March 2020; and WHEREAS, the impact to the economy of the State of Hawai’i has been significant and will result in a steep reduction of general fund support for the continued operation of the University, which may be compounded by an overall decline in student enrollment and associated tuition and fee revenues; and WHEREAS, the duration of the foregoing adverse financial impacts to the University is anticipated to be for at least several years or longer, and will have direct impact on all aspects of continuing University operations including but not limited to its academic programs; course offerings; repair and maintenance of facilities; and utilization of residence halls, auxiliaries, classrooms, and laboratories; and WHEREAS, the University must play a vital role in assisting the State of Hawai’i in pivoting to recover from the adversities caused by the pandemic through university research, education, and service focused on community needs, including workforce and economic development in sectors necessary for the economic and social recovery of our State; and WHEREAS, in light of the unknown duration and depth of the pandemic’s impact, the Board of Regents (“Board”) urgently requests that the University administration expedite the development of a short-term plan to deal with the financial challenges facing the University beginning this fall, and a long-term University plan to incorporate a future vision of what the University must do to help the State recover and serve Hawai’i for a decade and beyond; and WHEREAS, due to the exigency of the current financial shortfall, the Board directs the Administration to consider certain measures for implementation in order to mitigate against the adversities presented by the COVID pandemic; and WHEREAS, in light of such adverse impacts, the Board declares that a state of emergency exists for the University, and recognizes that time is of the essence and that immediate strategic decisions and actions are necessary to maintain the continued viability of the University as an ongoing concern. NOW, THEREFORE, BE IT RESOLVED that the Administration of the University be University of Hawai’i Board of Regents RESOLUTION 20-03 directed to act in accordance with and to cause the following actions to be implemented with a sense of urgency, as set forth below: 1. In order to maintain the integrity and continued functioning of the University, the Administration is authorized to utilize whatever available means it has to reduce the operating costs and expenses of the University, including but not limited to, reduction-inforce, furloughs, retrenchment, freeze or reduction in remuneration, etc. 2. Correspondingly, the University is encouraged to invest in and accelerate the development of revenue-generating activities and facilities to offset some of the anticipated reduction in current funding sources. 3. The University of Hawai’i is established as a higher education system, incorporating multiple campuses and levels of educational programs, degrees, and services. Therefore, the Administration should, if necessary, use its system-wide authority to consolidate from the individual units and campuses, any revenues, reserves, programs, facilities, and vacant personnel positions for reallocation of those assets for the benefit of the University as a whole. 4. In addition, the Administration is hereby encouraged to institute a moratorium on the use of operating funds, except as approved by the President, on the hiring of new employees, discretionary pay increases, out-of-state travel, major equipment purchases and new contracts, and any other activity or expense that may exacerbate the current situation. 5. The Administration will prepare an immediate short-term plan for fiscal year (FY) 20202021 to be presented to the Board at its August 2020 meeting, which will outline the measures taken beginning in the fall semester, and how the financial shortfall for FY 2020-202 1 will be addressed. The short-term plan shall be subject to the review and approval by the Board as to its proposed strategy and approach. It is expected that reserves shall not be expended in a manner that results in a balance below the minimum (5%) level. 6. The Administration will also prepare a long-term plan, which will incorporate a future vision of what the University must do to help the state recover and serve Hawai’i for the next decade and beyond. The long-term plan will re-envision how the University will achieve its diverse statewide mission while achieving greater focus, effectiveness, and efficiencies in operations and in the use of its facilities. The plan shall contain the priorities of the University along with the criteria used to identify such priorities, and a public outreach plan to obtain input from the broader community and stakeholders. 7. In concert with short-term and long-term plans, the Administration can consider, if necessary, the temporary or permanent closure, reorganization, restructuring and/or merger of physical plant facilities, learning centers, programs, departments, colleges, and campuses to achieve additional financial and administrative efficiencies, academic effectiveness, and continued viability. Noting the urgency of the need for significant 2 University of Hawai’i Board of Regents RESOLUTION 20-03 change to achieve structural (not one-time) savings, notwithstanding any Regent Policies or Executive Policies to the contrary, the Administration is encouraged to utilize highly expedited processes for developing proposals for change and consulting on them. Adopted by the Board of Regents University of Hawai’i 2020 ________________ 3 DRAFT July 16, 2020 The Honorable David Y. Ige Governor, State of Hawaii Executive Chambers State Capitol Honolulu, Hawaii 96813 Dear Governor Ige, The Board of Regents of the University of Hawaii (“Board”) respectfully submits this letter to express our deep concern regarding the pending implementation of the public worker pay increases given the anticipated significant declines in University of Hawaii general fund appropriations and tuition revenues. As you are very much aware, the COVID-19 pandemic has and continues to engender a devastating impact on our local economy, which will in turn negatively impact the availability of State general funds to operate all State agencies, including the University system. At this time, University administration is projecting a decline in tuition revenues across the University system for the 2021 fiscal year as well as a steep reduction of general funds from the State. As a result, the Board has created a Task Group of its members to work and collaborate with the Administration on the development of a short term (2021-2024) and long-term plan (2023 and beyond) for the University. The plans will include the tactical and strategic management measures we will need to implement such as: freezes on hiring, major procurements, and travel; judicious utilization of reserves; programmatic consolidations and reductions; furloughs; and reductions in force. Our goal must be to ensure and maintain a viable and vibrant University that continues to meet the highest priority needs of the State. Ostensibly, the pending 2019 pay increases and adjustments will affect our decisions on the type and breadth of measures to be taken, and the degree to which some of these measures will be called upon. Although the University had agreed with the collective bargaining agreements reached, this was prior to the urgency of the COVID-19 pandemic. We do not secondguess those decisions, however, common sense has caused us to pause and reflect on the current course. We ask ourselves, does it make sense to give a pay increase one day and reduce pay or terminate employees the next? We think not. We, therefore, respectfully request that negotiations with the relevant public worker unions take place to defer the pay increases and adjustments until the State is in a better economic condition. Letter to Governor Ige July 16, 2020 Page 2 DRAFT We would appreciate your thoughtful consideration of our request. If you have any questions, please feel free to call the undersigned. Sincerely, Benjamin Kudo Chair, University of Hawai‘i Board of Regents The following members of the Board of Regents voted in support of this letter at the Board’s July 16, 2020, meeting: [list of Regents who voted in support] ____________________________________ Kendra T. Oishi Executive Administrator and Secretary of the Board of Regents