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Economists worry slashing the university’s budget could have ripple effects in local economy

Updated: May. 24, 2021 at 6:16 AM HST
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HONOLULU, Hawaii (HawaiiNewsNow) - Over the next two years, the University of Hawaii system faces a $90 million drop in funding from the state.

A new report by UH economists suggest that the cuts will result in a $650 million decline in economic activity statewide, potentially slowing down the state’s recovery from the pandemic.

“It is a big hit not just for our students and our faculty, and the ability to conduct the world-class research we do but also for the economy,” said Kim Burnett, research economist with the University of Hawaii Economic Research Organization.

According to the economists, each dollar the Legislature appropriates to the UH generates nearly seven dollars in additional federal research grants, tuition and other direct and indirect income.

They said any drop in that funding will result in a seven-fold decrease.

But some state lawmakers believe the impact of the budget cuts on the UH system will be less severe when you factor in the increase in federal funding.

They said the latest stimulus package will provide about $60 million for the UH.

“I think the federal funding will provide a reprieve in terms of the budget cuts that UH is incurring. That’s a relief,” said state Rep. Gregg Takayama, chair of the House Higher Education Committee.

But UH officials said much of those federal funds have to be used for financial aid for students -- and not for the university’s operational expenses.

They said a lot of the federal money will be spent on non-state funded enterprises such student housing, food services and athletics.

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