CHAPEL HILL, N.C. ― Leaders of North Carolina’s public universities met Tuesday to grapple with a looming threat that the federal government could withhold billions of dollars if the state loses a legal battle over transgender students and bathrooms.
A North Carolina law adopted in March requires transgender people to use the bathroom or locker room in schools or other public buildings that match the sex on their birth certificate. The U.S. Justice Department alleged in a lawsuit Monday that the 17-campus University of North Carolina and other state agencies observing the state law are violating federal civil rights laws.
UNC President Margaret Spellings, a former secretary of the U.S. Education Department, stressed as she has for weeks that the public universities are toeing a fine line. The universities will obey the state law without changing any policies or enforcing the bathroom requirements, hoping that won’t lead the Obama administration to cut federal funds, she said.
“We can’t operate this place without federal funding, and we would not put that at risk,” Spellings said after she and the UNC Board of Governors spent nearly three hours discussing the litigation.
Attorney General Loretta Lynch said Monday that the Obama administration for now isn’t cutting funds to the UNC system but is keeping that as an option.
Although the potential for a cutoff wasn’t imminent, it’s unlikely the Obama administration has “any greater interest in poor and minority students losing financial aid than we do,” Spellings said.
At stake for the UNC system is the potential loss of more than $1.4 billion in federal funds. An additional $800 million in federally backed loans for students who attend the public universities could also be at risk.
The UNC system and its Board of Governors are defendants in the Justice Department’s lawsuit but did not join separate lawsuits filed Monday by Gov. Pat McCrory and legislative leaders to defend the state law.
North Carolina’s 10 Republican members of the U.S. House of Representatives have asked U.S. Education Secretary John King to promise his agency won’t cut federal education funding over House Bill 2. The Education Department this year is sending nearly $4.3 billion to North Carolina, more than half of that in the form of federally backed student loans. Cutting off funding would be part of the same, unfounded attempt to extend protections to transgender people by re-interpreting civil rights beyond what Congress intended as the Justice Department is attempting, the lawmakers said in a letter.
Meanwhile, Democratic state legislators introduced legislation Tuesday that would replace HB 2 with state anti-discrimination protections expanded to include people based on sexual orientation, gender identity and marital status. The House bill would require equality in housing, insurance, lending, employment and education, and in restaurants, hotels and stores. People could use bathrooms or locker rooms “based on a person’s gender identity.”
Republicans, who hold legislative majorities, are not expected to bring the bill to a vote.