Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Higher Education, to which was referred Governor's Message No. 290, submitting for study and consideration the nomination of:

begs leave to report as follows:

Your Committee has reviewed the general history, résumé, and statement submitted by the nominee, and finds that the nominee does not have the necessary qualifications to be appointed to the Board of Regents of the University of Hawaii (UH).

Your Committee received testimony in support of the nominee from Hawaii Island Contractors' Association, Hawaii Island Portuguese Chamber of Commerce, KTA Super Stores, Mauna Kea Astronomy Education Center, ML Macadamia Orchards, L.P., Questor Associates, Willocks Construction Corporation, and thirty-two individuals. The nominee is the President of Pinnacle Investment Group, LLC. The nominee received an Associate of Arts degree from Sacramento City College. The nominee has a background in financial investments and has held various positions in finance and investments in the last fourteen years in Hawaii.

The nominee has served on the Board of Regents for ten months as an interim regent. His areas of expected expertise are the community colleges and the Island of Hawaii. He also claimed expertise in the business area.

The University of Hawaii system is a $1,000,000,000 institution. It serves nearly eighty thousand students statewide, consists of ten major campuses statewide with differentiated missions and generates $300,000,000 from federal, state, and private research and training grants. The UH is in the top one-third of the world's top five hundred research universities.

It is imperative to the future of our State that the Senate confirm individuals to the Board of Regents who: (1) understand their role; (2) are able and willing to challenge conventional thought; and (3) question recommendations or actions that may not be in the best interest of the people of Hawaii.

Your Committee has concerns with the nomination of Mr. Kai to the Board of Regents, which compels your Committee regretfully to reject the nomination. Your Committee bases its decision on the constitutional responsibility of the Board of Regents, the Board of Regents' own rules (BOR Rules), as well as the candidate's testimony before your Committee at two confirmation hearings.

Article X, Section 6 of the State Constitution states in part: "The board shall also have exclusive jurisdiction over the internal structure, management, and operation of the university."

Section 1-2, BOR Rules, provides for the relationship of the Board to the Administration and the UH and requires a working knowledge of university operations, procedures, and development goals. As stated in section 102a(1)(a), BOR Rules, "It is recognized that the Board has been granted full legal power and authority to manage and control the affairs of the University, and the responsibility for the successful operation of the University and the achievement of the purposes as prescribed in the statutes rests exclusively with the Board." In addition, section 102a(1)(e), BOR Rules, states: "The primary duty of the Board is first to determine and set forth the objectives of the University, and second, to provide the means, in the form of adequate budget, personnel and material, to achieve those objectives."

Based upon the foregoing requirements, pursuant to the State Constitution and the University's own duly adopted rules, your Committee is not satisfied that the nominee would fulfill the obligations of a member of the Board of Regents.

First, Mr. Kai failed to articulate a positive, proactive position pertaining to critical issues of the UH, particularly regarding the following issues: (1) the determination of administrative salaries; (2) the role of the community colleges; (3) the approval of stem cell research; (4) the approval of taro genetic engineering; (5) the approval of the University Affiliated Research Center; (6) the risks and benefits of classified research; (7) UH-Manoa vs. UH-Hilo as a research engine for the UH system; (8) the policy of a separate chancellor for all community colleges; (9) UH's sabbatical leave policy; (10) the policy of reviewing and eliminating established programs not providing revenue to the UH; and (11) the seven hundred vacant positions in the UH system due to funding being used to supplement other salaries.

Second, Mr. Kai failed to convince the Committee that he possesses the management experience and ability to contribute to a more accountable University system.

Because of the amount of service on the Board, Mr. Kai was expected to have a greater understanding of the workings of the University of Hawaii than a nominee without regent experience. During his tenure as an interim, the Board dealt with a number of important issues including contracting with the U.S. Navy to conduct classified research and the establishment of a University Affiliated Research Center, the establishment of the Hawaiian Language Ph.D. program at UH-Hilo, Mauna Kea Science Reserve Master Plan, the John A. Burns School of Medicine shortfall, the reorganization of the Manoa administration, and tuition increases.

Your Committee was not convinced that Mr. Kai had any substantive understanding of the community college system other than the need for new buildings. Your Committee was especially disappointed in the lack of comment regarding the unique specializations of the individual community colleges. On Maui and Kauai in particular, the community colleges are the primary sources of higher education and are offering the baccalaureate degree as well as graduate degrees through distance education. The lack of understanding of their programs at the board level could be a disaster for these neighbor island communities.

In spite of being the regent from the Island of Hawaii and in spite of having the chance to present his vision for the University of Hawaii at Hilo and Hawaii Community College twice before the Committee, Mr. Kai could not demonstrate any particular understanding of the needs of those campuses. Mr. Kai's primary point regarding UH-Hilo was that its administrators were "effective in the Legislature." The fact that the administration of UH-Hilo feels a need to approach the Legislature for support is evidence of the need for stronger representation for that island on the Board of Regents.

Of further concern was that Mr. Kai had repeatedly made a remark at both hearings to the effect that "Hilo is fine." Your Committee gave Mr. Kai several opportunities to clarify his remarks during the second hearing. At that time, Mr. Kai noted that the operational budget of UH-Hilo did need additional support, but that the Capital Improvement Project program "was fine." After being reminded by the Committee of the extent of disrepair in the UH-Hilo Science and Chemistry Building, Mr. Kai asked to retract his statement and acknowledged that much also needs to be done in the area of CIP. Of final note on this issue is that at no time did Mr. Kai raise the need for funds to remedy the deplorable conditions under which Hawaii Community College students engage in their education.

Mr. Kai displayed no evidence that he understood the relationship between research and doctoral programs, which is something your Committee believes an interim regent of ten months should minimally be able to do. He stated that UH-Manoa should be the research engine and that any campus should be able to establish doctoral programs where "strength is evident" and the demand exists. His statement was not only contradictory in and of itself, but is contrary to Board of Regents policy that states, "the University of Hawaii at Manoa will remain the only public research university campus in the state." When further asked why UH-Hilo was allowed to establish doctoral programs in Hawaiian Language and Pharmacology, Mr. Kai was unable to articulate to the Committee the unique strengths of the Hilo campus relative to Hawaiian language and science that may justify the Board's deviation from its own policy.

When further questioned as to how the Board would fund the doctoral programs that would be established using his logic, Mr. Kai again failed to provide a definitive and practical response. In fact, he stated that in time, programs should be self-sufficient. This response came as a surprise. Your Committee was concerned that a ten month interim regent was not aware that doctoral programs rarely, if ever, become self-sufficient.

Your Committee believes that the budget and finances of a large government operation such as the University of Hawaii system is beyond Mr. Kai's small business experience. His claim that he was specially qualified to deal with the University's budget was disconcerting. Of concern was that Mr. Kai did not provide evidence that he had seriously considered how to fund the multi-million dollar shortfall in the Medical School. He seriously suggested that increased focus on University of Hawaii branding items associated with athletics could bring in considerable income. This suggested that Mr. Kai had not familiarized himself with the one million dollar shortfall in athletics and the controversy regarding the monies wasted on branding during the previous administration. When asked for insight into how to increase funding for the University, Mr. Kai discussed tuition hikes without any reference as to how such increases could be accomplished while still addressing the needs of students from lower economic brackets, a population found especially in the community colleges and the neighbor islands.

Most worrisome was Mr. Kai's weakness in taking a stand on issues that demand critical thinking towards policy decisions by the Board. When presented evidence of past abuse of legislative funding of faculty positions to enhance administrative salaries, Mr. Kai evaded the issue by placing responsibility on a previous administration. However, Mr. Kai did not understand that the Committee merely wanted him to articulate a position on establishing a Board policy preventing future abuse. In discussing the controversial University Affiliated Research Center (UARC) and classified research, Mr. Kai had difficulty in articulating the pros and cons of such research. He stated that a danger of UARC might be "an arbitrary telephone call from a captain in the Navy asking the University to do research." When asked about abuse of sabbatical leaves, Mr. Kai again evaded the question.

Finally, Mr. Kai's subsequent comments as quoted in the media regarding the Committee's "loaded questions" and his comments about establishing doctoral programs on Maui and Kauai showed a complete ignorance of Board policy, fiscal responsibility, and practicality. Above all, his post-hearing behavior displayed inappropriate temperament for the position of a regent.

Your Committee believes that Mr. Kai's inability to provide relevant responses to questions of your Committee members, as well as his inability to articulate independent opinions and a coherent vision, is demonstrative of his unsuitability to be appointed to the Board of Regents.

As affirmed by the record of votes of the members of your Committee on Higher Education that is attached to this report, your Committee, after full consideration of the background, experience, and qualifications of the nominee, has found the nominee not to be qualified for the position to which nominated and recommends that the Senate not advise and consent to the nomination.