Incoming Freshman

August, 2004

When Hawaii Business queried David McClain, who was appointed acting president of the University of Hawaii System in mid-June, about why the university had never previously reported sales figures for inclusion in the annual Top 250, he paused for a second. “I honestly don’t know,” he finally said. “We’re certainly large enough to make the list.”

And that’s certainly a large understatement. With its three major campuses and seven community colleges generating $940 million in gross annual sales last year ($84 million more than it earned the year prior), the UH System not only makes this year’s list, it is also one of the state’s five largest businesses.

McClain says a number of factors contributed to the UH’s huge revenue leap last year, but it was largely the result of “an explosion” in research grants and contracts. In the fiscal year 2001 to 2002, UH researchers were awarded 1,616 grants worth a total of $251.2 million. The following fiscal year, the number of grants awarded increased by just two, to 1,618, but the total value of the grants went up $70 million to $321.1 million. Since 1997, the dollar amount of extramural research and training awards to the UH has been increasing steadily, but McClain fears an upcoming slowdown.

“We have a terrific group of researchers here at UH, who are able to win national competitions for grants and contracts because they’re so exceptional,” asserts McClain. “But there are a couple of clouds on the horizon that will provide a bit of a constraint on our ability to bid successfully for new grants.”

McClain says federal moneys available for scientific research will wane as defense expenditures consume more and more of the national budget. Furthermore, he says, UH researchers are running out of the required space in which to complete their research. “Our researchers are pretty amazing, so they may well still be able to increase their share of federal grants and contracts,” he says. “But we certainly do not expect a dramatic increase like we had last year.”

He does, however, expect enrollment to continue increasing, as it has steadily over the past several years, which should bode well for the UH’s bottom line. Last year’s campus-wide enrollment increase of 4.5 percent, combined with a 3 percent tuition hike, also contributed to the UH’s gross sales spike last year.

According to McClain, more students are looking at UH campuses for their higher education because it’s a more affordable, accessible college. “While we’re increasing tuition very modestly, many other universities around the country are increasing their tuition anywhere from 8 to 28 percent. So we’re a very good buy for the money,” he says. “Also, the perception of our quality is going up. We’ve built a reputation as a university system with high accessibility – meaning, admission is not selective, it is, by design, very accessible.”

But there is such a thing as being too accessible and admitting too many students. At the Manoa campus, which, for years, has lacked sufficient student parking and housing facilities, enrollment is back to last decade’s peak level.

“We are arguably right at our capacity to serve our students, because we’ve had such a strong surge in enrollment. We’re soon going to be challenged to expand our capacity, both in terms of classrooms and faculty,” says McClain. “If you have lots of people knocking at your door, there’s two ways you can handle that demand. You can be more selective by raising entrance requirements, or you can find a way to serve all of them. My sense is that [decision-makers] are in the middle of those conversations right now.”

At press time, they were neck deep in more pressing conversations, such as determining who would succeed recently ousted president Evan Dobelle. At the time, McClain, albeit well qualified for the job, hadn’t yet decided whether he’d throw his hat in the ring. However, he had determined several key areas the university would focus on in the upcoming year: getting the new medical school (which is set to open in early 2005) up and running; determining ways in which the UH can contribute more substantially to the state’s work force in key occupations; and pursuing more public/private partnerships for the university.

“This isn’t a complete list,” says McClain. “But these are certainly areas we’re taking a look at, that will hopefully benefit the university and the community for the long-term.”

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