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Getting a Piece of the Stimulus

Economic stimulus package provides major funding opportunities for HBCUs and students


While the new Congress and President Barack Obama’s administration are both only a few months old, there already have been a number of legislative initiatives that are either pending in Congress or signed into law that will greatly benefit both historically Black colleges and universities and their students. One such initiative is the $787 billion economic stimulus legislation that will provide billions of funds for education needs across the country.  

Known as the economic stimulus package, the “American Recovery and Reinvestment Act of 2009” (ARRA) signed into law by President Obama includes $575 billion in direct spending and $212 billion in tax incentives. A significant portion of this funding will flow directly to state and local governments in the upcoming weeks and months as a budget lifeline to help them avert severe cuts to government services because of declining tax revenues.

As part of these efforts, the stimulus package includes funding to address education needs for K-12 schools as well as private and public institutions of higher education. The U.S. Department of Education has recently released grant applications and detailed program guidance regarding this funding. The background information in this article will give HBCUs a head start in designing programs and getting in line with their applications. Some institutions will turn to law and consulting firms, like ours, to get help to make their best cases for support.

Title XIV of ARRA creates a State Fiscal Stabilization Fund to finance education needs at the elementary, secondary and postsecondary levels. The majority of funding appropriated to states under this program, $39.5 billion, will support efforts to either minimize or avoid cuts in the state funding of K-12 schools as well as public institutions of higher education, including many HBCUs. The goal of the fund is to restore state support for these institutions. This will be of great assistance to those HBCUs that were anticipating a huge cut to the portion of their capital and operating budgets funded by their state governments. 

Section 14004 of the law identifies the permissible uses for the funds state colleges and universities will receive from the state stabilization fund. They can use the funds, for example, to mitigate the need for a tuition or fee increase for in-state students. Also, they can use the funds to modernize, renovate or repair facilities primarily used for instruction, research or student housing, including those that employ “a recognized green building rating system.” They cannot, however, use the funds to increase their endowment; maintain systems, equipment or facilities; modernize, renovate or repair athletic stadiums; or modernize facilities used for “sectarian instruction or religious worship.”

In addition to the $39.5 billion in funding discussed above, ARRA also appropriates additional funds that can be used by both public and private institutions of higher education. Under Section 14002(b)(1) for example, it appropriates $8.8 billion for “public safety and other government services, which may include assistance for elementary and secondary education and public institutions of higher education, and for modernization, renovation and repair of public school facilities and institutions of higher education facilities, including modernization, renovation and repairs that are consistent with a recognized green building rating system.”

The Department of Education recently released applications and guidance so that states may now begin to apply for $32.6 billion under the state stabilization fund. The remainder will be made available later this year. 

While providing more assistance to colleges and universities, the package also increases funding available for a number of federal grant and student loan programs. This includes more money for federal Pell grants and college work-study. This increase will help many students at HBCUs. According to the National Center for Education Statistics, at Spelman and Morehouse colleges, for example, 42 percent and 58 percent of students, respectively, are eligible for federal grants. Pell and work-study grants will be distributed under existing rules and formulas.

Finally, the stimulus package provides $15 million in direct funding for preservation projects on the campuses of HBCUs across the country. The funding provided under ARRA can be used for 100 percent of project costs with no state match required.

Details on this additional grant funding have not yet been provided by the Department of the Interior. 

We do not expect this will be the end of funding opportunities made available to HBCUs as the Obama administration continues to work with Congress to address both the short-term need to help our economic recovery as well as the long-term need to invest in our nation’s future, including special emphasis on our education systems. HBCUs should vigilantly monitor all options that could help them pursue the best funding opportunities available to them, including appropriations, grant funding and tax credits, among many others.

— A. Scott Bolden is managing partner of the Washington, D.C., office of Reed Smith LLP, and Eddie N. Williams is president and CEO of Eddie Williams and Associates LLC and former president of the Joint Center for Political and Economic Studies. Together they have formed a legal and consulting team to assist HBCUs to take advantage of both traditional and nontraditional opportunities to achieve their funding goals and objectives.

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