Outlook doubtful for $30 million bailout for Birmingham-Southern
State lawmakers say it is unlikely the Legislature will provide $30 million for Birmingham-Southern College to help rescue the private institution from closing because of financial problems.
Birmingham-Southern, a liberal arts college with roots going back to 1856, has requested one-time state funding as a bridge to supplement a private fundraising effort aimed at rounding up $200 million over the next several years.
AL.com first reported in December that Birmingham-Southern was in danger of closing this year without the public support because of financial problems that go back more than a decade. The college is also seeking $5 million from the city of Birmingham and $2.5 million from the Jefferson County Commission, a total of $37.5 million in public funds.
Alabama House Speaker Nathaniel Ledbetter, R-Rainsville, said he met with Birmingham-Southern President Daniel Coleman about the request. Ledbetter said using taxpayer dollars to keep a private college open would set the wrong precedent.
“I commend him for his efforts because I think he’s trying to do everything he can to save his school,” Ledbetter said. “But at the end of the day, I don’t know that it’s the state’s job to bail out schools, private schools. It’s a slippery slope. If it’s Birmingham-Southern this year, who is it next year? What’s the next college or what’s the next big issue?”
The $30 million request to the Legislature includes $17.5 million from the Education Trust Fund and $12.5 million from Alabama’s share of the American Rescue Plan Act (ARPA), a COVID-19 relief package passed by Congress. The Legislature is expected to decide soon how to use the remaining $1 billion of the state’s ARPA funds.
Rep. Juandalynn Givan, D-Birmingham, said her phone has not stopped ringing since AL.com broke the story about the plight of Birmingham-Southern, which is in her district. She called Birmingham-Southern one of the best liberal arts colleges in the nation and said the pressure to keep it open is understandable because of its influential alumni.
But Givan said she is also hearing from Democratic and Republican colleagues with many questions about the request. She said they don’t want to see the college shut down but have concerns about the amount of the request and about treating Birmingham-Southern differently than other private colleges that have been in financial trouble.
“I just don’t see them getting $30 million if they need it from the state,” Givan said. “I just don’t see it.”
Givan said Birmingham-Southern might have gotten a better initial response if the college offered a payback plan, a request for a loan instead of a gift. She said lawmakers have concerns that the college has not received a commitment from the city or county on the funding requests.
Givan will host a town hall meeting on Birmingham-Southern’s problems at A.H. Parker High School on Feb. 16. The meeting starts at 6 p.m.
“I want to hear from the public and whoever wants to come to see what they have to say,” Givan said. “And go from there.”
Rep. Danny Garrett, R-Trussville, the chairman of the House education budget committee, said he does not expect approval of Birmingham-Southern’s request of $30 million.
“There continues to be ongoing conversations between BSC’s leadership, alumni, other advocates and state government officials,” Garrett said in an email. “Everyone involved in these discussions is concerned and empathetic to BSC’s situation. However, it is difficult to see a path forward for the request that the state provide significant funding for this private institution.”
Rep. Jim Carns, R-Vestavia Hills, sent a letter last year to Jefferson County legislators about Birmingham-Southern’s urgent need for the money, saying the college would not be able to operate after May 2023 without financial help. Sen. Jabo Waggoner, R-Vestavia Hills, also sent the letter. Carns said Wednesday there was “not much support at all” in the State House for the $30 million request.
“I do not think they have any serious support on the fifth floor (the House of Representatives) and none that I have found on the seventh floor (the Senate),” Carns said.
Birmingham-Southern President Coleman has gotten firm commitments from hundreds of donors for a total of $45 million in donations toward a goal of $200 million by May 2026, the college has said. The money will be used to rebuild the endowment fund. Birmingham-Southern said its financial problems are the result of a building program on the campus in the mid-2000s that reduced the endowment and put the college in debt, the economic downturn of 2008 to 2009, and an error in accounting of federal financial aid.
“Birmingham-Southern College and its graduates have made great contributions to our state, nation, and indeed the world,” the college said in a statement issued last year. “We are now asking for support with bridge funding to ensure the future of this valuable educational institution.”
Ledbetter said it’s his hope that Birmingham-Southern can raise enough money from alumni and other donors to regain its financial footing. Ledbetter said his concern was not as much about the amount of the request as about the precedent it would set.
“I think it could create some issues,” the speaker said. “And listen, I’ve got some good friends that’s going to probably be pushing it. And I respect that. I respect why they’re doing it. But I think they’ve got to respect why I feel the way I do, too. So, from my standpoint, I’d hate to see us go down that road.”
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