by TaRessa Stovall:

The butterfly effect – the concept that fluttering butterfly wings might set off minute changes in the atmosphere, affecting the path of a tornado far away – can be applied to the impact of America’s recession on many institutions, especially Historically Black Colleges and Universities (HBCUs).

With all of America’s mainstream colleges and universities deeply affected by the recession, the nation’s 105 HBCUs, which typically have smaller endowments than their mainstream counterparts, are preparing for and coping with tough financial realities.  Endowments are hit hard by stock market fluctuations and decreasing donor dollars,  affecting everything from student admissions and financial aid to basic operating costs and the school’s overall assets.

Students at Jarvis Christian College in Hawkins, Texas, studying aquatic life

A December 3 article in The New York Times, headlined “College May Become Unaffordable for Most in U.S.,” reported that “The rising cost of college – even before the recession – threatens to put higher education out of reach for most Americans,  according to the biennial report from the National Center for Public Policy and Higher Education.”

That report, “Measuring Up 2008,” found that published college tuition and fees rose 439 percent from 1982 to 2007, contrasted with a 147 increase in median family income (figures not adjusted for inflation). Middle-class families are funding their children’s higher education by taking on debt, and low-income students are less likely to be able to afford college as the economy tightens. All institutions of higher education were included in the report’s findings, though data for HBCUs was not calculated or reported separately.

As The New York Times reported in a November 10 story, “Colleges Struggle to Preserve Financial Aid,” “educational institutions are cutting spending, delaying projects and holding off on hiring,” due to the economic downturn.

When America’s money is funny, historically black institutions of higher education know to prepare for lean times. “I see this as a national crisis, and one which will affect the historically black college community disproportionately,” said Michael Lomax, President of the United Negro College Fund (UNCF), the nation’s largest, oldest and most comprehensive minority higher education organization. “I think this is very troubling, and I think we have to be very sober in considering what the impact of this more-than-just-cyclical downturn in the economy may have.”

At UNCF, which provides operating funds and technology enhancement services for 39 member HBCUs, scholarships and internships for students at about 900 institutions, and faculty and administrative professional training, they are anticipating “a minimum loss in our endowment of $5 million in revenues this year,” Lomax said. “We provide over 9,000 scholarships a year, and we provide direct support to our [member] colleges. I’m not so sure our scholarships will be so affected this year, because they’re budgeted for. As far as our support to colleges, we’re at risk of seeing some erosion in that. We’re already hearing from foundations and corporations that they’re being very cautious about what they are going to commit to.”

As a result, students at HBCUs, who most often come from low-to-moderate income backgrounds, are the first in their family to attend college and live what Lomax described as “very fragile economic existences to begin with and find it tough to pursue higher education in the best of times,” are being profoundly affected by the recession.
“They rely on federal financial and local state aid; they are also disproportionately dependent upon borrowing. I think this is going to be very hard on them,” Lomax said.

Spelman College in Atlanta, the nation’s oldest HBCU for women (the other is Bennett College for Women in Greensboro, N.C.), is considered one of the economically strongest HBCUs. Yet they, too, are feeling the economic butterfly effect. “There is a myth that Spelman College as an institution is wealthy and that our students are predominantly from upper-class backgrounds,” said College spokeswoman Tomika DePriest, Executive Director of Communications. “Of the 2,200 students enrolled, 40 percent are Pell Grant-eligible, more than any other highly-selective liberal arts college. Couple this with … student loans and budget reductions, and you can conclude that Spelman is healthy, not wealthy.”

Spelman has been hurt by the volatility of the stock market, DePriest said, and earlier this year President Beverly Daniel Tatum began discussions with other college presidents about ‘shielding student loans from the eye of the storm,’ the title of an opinion piece she wrote for the May 1 issue of the Atlanta Journal-Constitution.

In the article, Tatum made the case that “the cash-strapped government will not be able to solve the problem … in time for fall semester 2008, and that private lending must be replaced by private philanthropy.” DePreist said, “The institution plans to reduce spending by freezing some positions and delaying some projects, if necessary.”

The UNCF is on the same page. “Our big distributions to the colleges occur in February and June,” Lomax said. “What we will distribute … next year will be contingent upon our meeting fundraising goals and maintaining our expense structure at a lower cost.”

One Georgia lawmaker suggested merging HBCUs with predominantly white institutions to save money. A December 10 article in The Atlanta Journal-Constitution reported that Republican Seth Harp, chairman of a key state Senate committee, said “the University System, which has 35 public schools and a $2.3 billion state budget this year, will have to make some hard choices to come up with budget cuts that could top $200 million.” Part of Harp’s rationale is that in Savannah and Albany, “white-and-black-majority schools are part of the legacy of segregation. “It’s time Georgia closed that ugly chapter,” Harp said during a hearing on the University System’s budget, suggesting that a merger would lower administrative costs and decrease duplication of similar academic programs.

Harp’s suggestion met with strong opposition from supporters of HBCUs, who stressed the role they play as independent campuses. Sen. Vincent Fort (D-Atlanta), who has taught political science at Morehouse and Morris Brown Colleges, both HBCUs, called the proposal “a bad idea. Black schools serve a purpose of offering not only programs, but an atmosphere conducive to black students graduating. The challenge is not only getting African-American students in but keeping them in.”

While mergers may or may not be an outcome of the recession, all colleges and universities must adapt to tough financial realities. In the November 10 New York Times article, “Colleges Struggle to Preserve Financial Aid,” Steven Rattner, a managing principal of the Quadrangle Group and acting chairman of Brown University’s investment committee, concluded that “every school is looking at what they can cut and what they can reallocate. Nobody thinks the market will turn around and go back to do what it did before. That means everyone is having to plan for a more difficult and turbulent financial environment to bring our expenses in line with resources.”

The UNCF disburses $80 to $90 million worth of aid annually. While being realistic about the challenges ahead, Lomax is cautiously optimistic about the potential effect of the Obama presidency on higher education economics. “I think it will make such a difference to have a president who is committed to thoughtfully planning for the future and recognizing that human capital is important.

“There is a tremendous demand and need to support young people who have done everything they were supposed to do and still don’t have the financial wherewithal to go to, pay for and graduate from college,” Lomax said. “We haven’t had an educational policy that will address this and this is particularly troubling in the 21st century, because the largest number of young people potentially in the pipeline to go to college are black and Hispanic and low-income. If this country is going to have a robust and strong work force in the 21st century, we are going to have to invest in these kids.”