One of the major challenges facing the University of Hawai'i-Manoa campus is aging facilities, Chancellor Virginia Hinshaw said in her inaugural address at Kennedy Theatre yesterday.

Hinshaw assumed her post in July as the university's first permanent chancellor in more than three years. She was recognized by state leaders yesterday in a ceremony honoring both her inauguration and the centennial year of UH's flagship campus.

Hinshaw told the crowd of hundreds of faculty, staff and students that the campus's deteriorating facilities must be refurbished if the university is to be a "destination of choice" for students and faculty.

"Facilities, whether dorms, classrooms, libraries, offices or laboratories, are critically important in recruiting students who have choices, staff who provide valuable services, and also faculty who are predicted to retire in large numbers within the next five years," Hinshaw said.

"Manoa is a jewel in many ways, especially academically. But it is badly tarnished physically," Hinshaw said.

Hinshaw also addressed UH's relatively low graduation rate. Only about 55 percent of UH-Manoa's students graduate within six years. That's about 12 percent below comparable institutions.

"I want high school students of Hawai'i, particularly our Native Hawaiians, to come to Manoa and graduate at a high rate in a timely manner," she said.

Before joining UH-Manoa, she served as the provost and executive vice chancellor at the University of California-Davis, where she oversaw a $2.3 billion budget and was responsible for the UC-Davis Health System and campus operations.

Hinshaw is also a virologist and has spent 25 years researching flu viruses.

"Her background in science will be an asset to the university," Gov. Linda Lingle said during the ceremony. "She will make certain that our university works toward becoming a world leader in research."

Hinshaw's inauguration was also attended by U.S. Rep. Mazie Hirono, D-Hawai'i; UH System President David McClain; and UH Board of Regents Chairman Allan Landon.

Hinshaw's appointment as chancellor will last through June 2012.

Reach Loren Moreno at lmoreno@honoluluadvertiser.com.