Report says Dept. of Education should invest more in HBCUs
19th November 2018 · 0 Comments
By Meghan Holmes
Contributing Writer
The United States Government Accountability Office recently released a report encouraging the Department of Education to further HBCU capital investments through the department’s Capital Financing Program.
Congress started the program in the 1990s to provide a funding source to HBCUs for capital projects, offering loans with interest rates near the government’s cost of borrowing. Hundreds of millions of dollars remain available for lending, but less than half of HBCUs have ever participated in the program, despite more than 46 percent of schools reporting needed campus improvements in a 2017 GAO survey. This continued disconnect between remaining money for borrowing and unmet need for capital financing at HBCUs led the GAO to visit schools and conduct an online survey to raise awareness of the program and understand why schools may or may not choose to participate.
In Louisiana, several schools participated in the Capital Finance Program in the aftermath of Hurricane Katrina, through a subset of the program called the HBCU Hurricane Supplemental Loan Program.
“The Katrina Loan was run through that program since it was the only vehicle in place to manage it,” said Dr. Walter M. Kimbrough, Dillard University President. “Of course, it has been forgiven so we have nothing in the program now.”
In addition to Dillard, Xavier, SUNO and Tougaloo all received money to repair storm damage through the program.
“On June 13, 2007, Xavier University participated in the U.S. Department of Education’s HBCU Capital Financing Program to refinance debt and fund facility improvement projects. On April 4, 2018, the $132 million loan was forgiven by the U.S. Department of Education,” said Diana M. Hernandez, Director of Marketing and Communications with Xavier.
In April 2018, Congress forgave the $350 million remaining owed to the Department of Education by the four schools in a bipartisan bill. At the time, Representative Bill Cassidy told Nola.com |The Times-Picayune, “Let’s keep in mind that in New Orleans, these campuses were destroyed because of failure of federally built and theoretically-maintained levees, and this is what it took to get them back into shape.”
Apart from the subset of loans some schools received after Katrina, several regional HBCUs have participated in the capital finance program, as well as in the recent GAO study. Others have yet to participate, reporting that loan collateral requirements and sometimes local legislation bars them from taking advantage of the program.
Both SUNO and Dillard participated in the GAO’s study despite not currently receiving funding from the program. “We have a number of newer buildings, so we probably skewed the study a little bit,” Kimbrough said. “We still have some facilities needs, but more so for growth with 150 students living on campus.”
Grambling State University currently participates in the capital finance program, reporting $1.2 million a year in annual savings as a result of the program in a recent press release. An October report from the University of Louisiana System revealed that the school had doubled their fiscal health ratio since 2016, partially as a result of the capital financing program.
“From its enrollment numbers to its operations, it’s exciting to see the rapid and significant advancement of this historic institution,” University of Louisiana System President Jim Henderson said.
The GAO team visited nine campuses across five states, and surveyed more than 100 schools online. “We chose to visit Louisiana to learn more about the loans HBCUs received after Hurricanes Katrina and Rita and the colleges’ recovery efforts. During our site visits, we met with senior leadership – presidents, chief financial officers, facilities managers…strengthening relationships with HBCU grant coordinators – because they generally make decisions on capital project planning,” the report said.
Following their research, the GAO recommended continued direct outreach to individual HBCUs and steps to address participation challenges for some public HBCUs in the Department of Education’s outreach plan, and an analysis of the potential benefits and costs of offering loan modifications in the program. The Department of Education outlined plans to address the first recommendation, and partially agreed with the second.
HBCUs are important to Louisiana’s (and the nation’s) economy, with the United Negro College Fund reporting that HBCUs contribute more than $15 billion each year nationally. They also play a pivotal role in educating Black students, with about one-third of African Americans who receive a doctorate in science, technology, engineering or mathematics earning their undergraduate degrees from HBCUs. Because of their importance to education and the economy, GAO and the Department of Education continue to encourage participation in the capital finance program and work to make it more accessible to schools that need it.
This article originally published in the November 19, 2018 print edition of The Louisiana Weekly newspaper.
