State lawmakers are advancing a proposal that would let the state raid unspent tuition and fee balances from the University of Hawaiʻi and move the money into the general fund. UH officials are sounding the alarm, calling the potential hit to their reserves "catastrophic" for the system. At its core, the fight is over who gets to control UH tuition dollars and how tightly that money can be tied to the campuses where it is collected.
What the bill would do
Senate Bill 2602 would require that tuition and student fees be spent for the benefit of the specific campus where they are collected and would change what happens to leftover cash at the end of the fiscal year. Under the version filed with the Legislature, any unspent amount in the University of Hawaiʻi Tuition and Fees Special Fund would lapse to the state general fund at year end, according to the Hawaii State Legislature. Backers say that would free up money for statewide priorities. Critics counter that it strips UH of the flexibility it needs to manage a sprawling, multi-campus system.
A House Draft 1 amendment tries to narrow the sweep. Beginning June 30, 2029, only unencumbered cash in the tuition-and-fees special fund that exceeds two months of operating expenses would be transferred to the general fund, according to the bill summary on LegiScan. The HD1 also reiterates that tuition and related fees should be spent at the campus where they were collected. That shift away from systemwide pooling and toward campus-by-campus accounting is a key flashpoint for UH leadership.
University officials push back
UH leaders and faculty are lining up against the measure. In testimony to the House Finance Committee, interim UH president Wendy Hensel warned that tying spending to individual campuses would "transform the system ... into 10 specific siloed campuses" and said the change would be "catastrophic" for the university's ability to move funds where they are most needed, according to Honolulu Civil Beat's transcript of the April hearing. Hensel and other administrators told lawmakers that flexibility is essential to cover ongoing operations, upgrade technology and respond when federal funding formulas shift. Those themes surfaced repeatedly in written testimony and at multiple committee hearings.
The UH Professional Assembly, which represents faculty and professional staff, filed written opposition arguing that sweeping tuition into the general fund would effectively turn student fees into a tax and pull resources away from classrooms, as reported by The Garden Island. Faculty worry that campus services and systemwide academic programs could be squeezed if each campus is forced to rely strictly on the tuition it brings in locally.
Money on the books and the case for the sweep
Supporters of SB 2602 point to the size of the tuition-and-fees special fund. The balance sat at roughly 429 million dollars as of June 30, 2025, according to the Tax Foundation of Hawaii. Advocates for the sweep argue that some of that cash could be put to work for other pressing statewide needs. UH officials and other opponents respond that the money is not just gathering dust and is already factored into plans for student support, deferred maintenance and multi-year projects.
Small campuses, libraries and emergency response
UH administrators have laid out a practical case for keeping tuition dollars pooled. Smaller campuses such as Kauaʻi Community College often do not generate enough local tuition to fully cover operations, and systemwide transfers are used to fill those gaps, Hensel told lawmakers in testimony reported by Honolulu Civil Beat. Forcing every campus to stand alone financially, they argue, could actually increase the cost of running UH and threaten services on neighbor islands.
The Tax Foundation has also highlighted the university's construction and maintenance challenges. When UH sought authorization in 2019 to rebuild Sinclair Library, it requested about 41 million dollars. By the time work started in 2023, the projected cost had climbed to roughly 57 million dollars, the foundation noted. UH officials point to situations like that, along with long-term deferred maintenance, as reasons why the system needs to maintain multi-year reserves.
What is next
SB 2602 has already cleared Senate committees and moved over to the House in amended form. The House Finance Committee recommended passage of the HD1 version on April 7, 2026, according to LegiScan. The measure still needs final floor votes in both chambers and the governor's signature before any new lapsing rules would kick in. UH leaders say they intend to keep pressing lawmakers for guarantees that core student services and campus programs will not be gutted in the process.
Opponents stress that the risk is not theoretical. On Halloween Eve, October 30, 2004, a flash flood sent muddy water and debris roaring through Mānoa, inundating Hamilton Library and damaging dozens of buildings across the campus, as documented in a post-disaster report in the Journal of Information Management. Those wary of SB 2602 warn that if tuition reserves are forced to lapse to the state now, UH could be left without the quick-access funding it needs when the next emergency hits.
