RALEIGH — Shaw University has secured a $31 million federal loan with help from U.S. Rep. Bob Etheridge, a windfall Shaw officials are celebrating as a financial lifeline to the cash-strapped school.
The federal loan shifts millions owed to Bank of America to the U.S. Department of Education, stretches Shaw's debt out over 20 years, reduces collateral and drops the interest rate nearly two points to 4.1 percent, according to a memo from interim Vice President Lee Monroe.
But as Shaw fights its way out of a mountain of debt, there is a sense that the school's top officials are neglecting their share of the burden.
On March 15, the school's Florida alumni group sent e-mail to Shaw administrators saying it was "amazed" that giving among board members had totaled only $41,089 since July. Last spring, board chairman Willie Gary pledged that each of the school's roughly 40 board members would contribute $50,000 to the cause.
"There were questions which were quite puzzling [such as] what contributed to the lack of leadership in giving by the board members in this time of financial crisis at Shaw U?" said the message sent by Larry Williams, interim co-chairman of Florida Alumni Network.
In his message, Williams noted that alumni had contributed $300,000. He declined comment Monday.
Further Shaw documents show a history of unpaid pledges. According to private audits conducted between 2002 and 2006, a single board member owes at least $7 million in money promised to the university. The audits, conducted by The Wesley Peachtree Group in Atlanta, do not name the board member.
Asked about board giving, Interim President Dorothy C. Yancy said she has asked for financial support from all board members but has not attempted to collect any unpaid pledges. Gary made a $10 million pledge in 1991, shortly before becoming Shaw's board president. Yancy said she did not know whether the unpaid $7 million was part of that pledge. "You need to ask him," she said.
Gary did not return repeated calls to his Florida law firm about the 1991 pledge. Shaw's national alumni association president Emily Perry declined to comment about money from board members, and several other members could not be reached for comment. Monroe, Shaw's interim vice president, did not return a call.
About 2,700 students attend Shaw. Its board consists of educators, business people and Baptist officials in North Carolina, Florida and New York, as well as boxer Evander Holyfield and boxing promoter Don King, according to Shaw's Web site.
Shaw's financial developments and alumni concerns come as the school is seeking a new president and preparing for its accreditation to be renewed in 2012.
The school's money troubles resonate with other small, private black colleges across the country, many of which are struggling to survive as donations dry up in the recession. In February, President Barack Obama signed an executive order making historically black colleges eligible for more federal programs.
Last week, Yancy said the federal loan restructures several pieces of privately held debt. She would not disclose the size of the loan, citing Shaw's status as a private college. Officials at the Department of Education confirmed the amount is roughly $30 million, as described in Monroe's memo.
"The debt needed to be renegotiated," Yancy said. "I don't think people publish what they owe, and this is a private institution."
Yancy said her office called Etheridge when the loan got tied up before its February closing date. She said the deadline wasn't dire but rather a goal set by Shaw.
"You know how you have your mind set on something?" Yancy asked. "I was looking forward to that date, and it looked like it was going to go into March."
Etheridge said Shaw's president and attorney contacted his office, calling it an urgent matter, and he spoke with U.S. Secretary of Education Arne Duncan about moving quickly. He did not know either the size of the loan or the terms, he said.
"We never ask that," he said. "We don't have any business knowing that. ... Certainly Shaw is the oldest historically black institution in the South. They're important not only to Raleigh but our district. But we try to take all the calls from our constituents whether they're small or large."
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