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Welcome
Welcome to the second issue of The Academic Advisor for 2024.
In this edition, we examine the following topics of import for schools, institutions of higher education, and other education-focused organizations:
- Inflation Reduction Act Tax Credits funding school facilities and energy bills;
- Artificial intelligence challenges embraced by Chief Information Officers;
- The pending Request for Information on Sexual Violence from the U.S. Department of Education;
- Implications of the U.S. Supreme Court’s refusal to review a race-neutral admissions policy;
- New restrictions on transgender care and athletic participation in Ohio;
- How to mitigate the risks, costs, and administrative burdens of “ghost students;” and
- The latest on debt relief for student borrowers.
The business of operating any organization, including educational institutions, is characterized by relentless change. To assist our clients in navigating this dynamic landscape, we pride ourselves on our ever-evolving practice. For 2024, we have developed "ReSolutions,” a report that shows how our evolution as a firm translates into impactful enhancements to client service. To continue our commitment to next level client service, the Spilman footprint also has expanded to include a group of top-tier attorneys from Huntington, West Virginia. Please click here to learn more and view the interactive “ReSolutions” report.
If you have any questions about these topics or need legal support on education matters, please let us know. As always, thank you for reading.
Erin Jones Adams, Member, Co-Chair of the Education Practice Group, and Co-Editor of The Academic Advisor
and
Kevin L. Carr, Member, Co-Chair of the Education Practice Group, Co-Chair of the Labor and Employment Practice Group, and Co-Editor of The Academic Advisor
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“According to the U.S. Department of Energy, K-12 school districts spend nearly $8 billion annually on energy costs, the second largest expense after teacher salaries.”
Why this is important: Deferred maintenance and budget pressures have severely weakened the energy efficiency of U.S. school infrastructure, particularly with respect to local public school districts. To address this problem, the U.S. Department of Energy announced a grant program funded by the Bipartisan Infrastructure Law, which is intended to fund energy improvements for public school facilities.
The Supporting America’s School Infrastructure program provides a refundable tax credit, which is available to tax-exempt school districts that are instrumentalities of local governments, through an elective pay mechanism, also known as direct pay. Eligible school districts can apply for energy tax credits, as well as for direct funding from the IRS for qualifying projects.
Eligible tax credits include clean energy credits, such as the Investment Tax Credit (IRC Code Section 48 and 48E), Production Tax Credit (Section 45 and 45Y), electric vehicle credits under the Commercial Clean Vehicle Credit (Section 45W), and the Alternative Fuel Vehicle Refueling Property Credit (Section 30C).
The credits can be used to offset the costs of various energy projects, such as:
- Purchase of electric school buses and other clean energy vehicles,
- Solar panel installations,
- Geothermal heating and cooling systems,
- Hydropower and irrigation,
- Biomass and landfill management, and
- EV chargers.
The value of available credits can be increased through available bonuses, multipliers, and other incentives that prioritize domestic content, prevailing wages, fossil fuel replacement, and low-income communities.
The tax credits are available for projects using institutional funds as well as tax-exempt grants. An eligible tax credit under the program will be available using the basis of the entire project, including grant proceeds. An example given is the expenditure of $400,000 for an electric school bus, consisting of $300,000 in grant funds and $100,000 of school district funds. The maximum Section 45W credit of $40,000 is available.
To use the elective pay feature, an eligible institution registers its intent to claim credits for an applicable project with the IRS. Once the property is placed in service, the school district files a Form 990-T, Exempt Organization Business Income Tax Return, for the taxable year in which the applicable property is placed into service. The IRS will process the claim and issue the direct payment no earlier than the due date of the return (even if the return is filed early). If the organization does not have a filing requirement, it has an automatic six-month extension to file the Form 990-T. --- Anthony L. Huber
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“CIOs on university campuses across the country have an obligation, as technology leaders, to provide the tools and expertise that staff, administration, and professors require to help fulfill the potential of students, and the university itself.”
Why this is important: Employers across the country are increasingly looking for new recruits out of college to have a working understanding of Generative Artificial Intelligence (AI) tools to be considered employable. This is true across many industries, but is especially relevant right now to candidates for jobs in tech and engineering. As a response, Chief Information Officers (CIOs) at universities, many of whom come from the corporate tech world themselves, are looking for every opportunity to provide professors, students, and the university community with the resources they need to integrate Generative AI into higher education curricula and administration.
The integration of AI into the campus community is not just focused on providing students with direct training, but is also aimed at creating administrative efficiencies. Florida State University, for example, has developed a model to predict student outcomes based on historical data. When tested, the AI model returned the same results as expert data scientists in an incredibly small fraction of the time and drew additional valuable conclusions not considered by the human scientists. This shows how tasks that may require too much human capital to be “worth it” can be achieved by AI and provide a massive administrative benefit.
In a different application, Georgia State University has found that incoming students in particular circumstances may prefer AI powered advisor chatbots to human academic and financial aid advisors. These tend to be lower income and less advantaged students who may shy away from discussing their issues with a human, but feel more comfortable seeking the information they need through an AI portal.
While many in academia are concerned about the implications of AI on academic integrity, including the increased risk of plagiarism and copyright infringement when AI tools are used without limitations or disclosure, it is important to remember that these tools are here to stay and cannot be removed entirely from campuses across the country. Forward-focused universities are aware of this and are developing ways to balance integrity with the real economic need to teach and utilize generative AI inside and outside the classroom. --- Shane P. Riley
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“Feedback on how to prevent sexual violence is to be submitted via the Federal eRulemaking Portal by March 11.”
Why this is important: The Violence Against Women Act (VAWA) Reauthorization Act of 2022 mandates that the Task Force on Sexual Violence established by the U.S. Department of Education (ED) solicit information from constituents, including schools and institutions of higher education, regarding the prevention of sexual violence at educational institutions. (For purposes of VAWA, “educational institution” is broadly defined to include an institution of higher education, secondary school, and elementary school.) In furtherance of this aim, ED recently issued a request for information (RFI) in late January.
Among other questions, the RFI asks constituents to address best practices for providing survivor resources (such as academic and confidential support services), responding to and preventing sexual and dating violence on campus, establishing prevention and response teams and sex education programs, engaging with student groups, and using approaches that are both “culturally responsive and linguistically inclusive” based on factors such as race, religion, ability, sexual orientation, gender, and socioeconomic status. The RFI also provides constituents with an opportunity to address ways that the federal government can support the prevention of sexual and dating violence, including “online threats, harassment, intimidation, and other forms of technological abuse.”
In addition to soliciting information, the Task Force is charged with providing recommendations to educational institutions on these subject areas, making the RFI a useful opportunity for “boots on the ground” constituents to have their input considered in the development of such recommendations. In responding to the RFI, ED has asked participants to provide “supportive research (qualitative or quantitative) or promising practices” and include “citations, websites, or other information that will enable the Task Force to learn more.” Educational institutions are not required to respond. For any organizations seeking to participate, March 11 is the deadline to submit feedback. Comments must be submitted via the Federal eRulemaking Portal and should include only information that constituents wish to make publicly available. --- Erin Jones Adams
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“It leaves in doubt whether the court, which has a 6-3 conservative majority, has the votes to strike down admissions policies that do not explicitly consider race but nevertheless lead to a more diverse class.”
Why this is important: Earlier this month, the U.S. Supreme Court denied a petition for writ of certiorari in Coalition for TJ v. Fairfax County School Board, refusing to consider whether an admissions policy upheld by the U.S. Court of Appeals for the Fourth Circuit violated the Equal Protection Clause of the Fourteenth Amendment. In denying the writ, the Supreme Court signaled that at least for the time being, race-neutral admissions policies are not subject to the same level of scrutiny that the Supreme Court imposed in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College to strike down race-conscious admissions decisions.
In Coalition for TJ v. Fairfax County School Board, the School Board sought to promote diversity by increasing the number of offers extended to students in middle schools that were poorly represented at TJ, to low-income and special education students, and to students engaged in community service and school leadership activities. Under the challenged admissions policy, each middle school within participating school divisions allocated a number of ninth-grade seats to a set percentage of the eighth-grade population at that school. Within each middle school, prospective students were evaluated on the basis of grade point average, a problem-solving essay, a portrait sheet, and experience factors. In adopting the policy at issue, the School Board resolved that the admissions process must use only “race-neutral methods that do not seek to achieve any specific racial or ethnic mix, balance or targets.” In furtherance of this codified resolution, information about candidates’ names, race, ethnicity, and sex were not provided to admissions evaluators. The resulting impact for the class of 2025 was “markedly more low-income students, English-learners, and girls” than prior classes at TJ. In addition, although the offers extended to Asian-American students outpaced other racial and ethnic groups, they were lower in 2021 than in previous application cycles.
In its complaint, the Coalition alleged that although the policy was facially race neutral, the policy had a disparate impact and was adopted with a racially discriminatory purpose, namely “to reduce the percentage of Asian-American students who enrolled in TJ” and thereby use the policy as an unconstitutional “proxy in order to racially balance TJ.” The district court agreed. On appeal to the Fourth Circuit, the School Board argued that the admissions policy did not have a racially disparate impact on Asian-American students and the School Board had no discriminatory intent.
In reversing the lower court decision, the Fourth Circuit ruled that focusing solely on how Asian-American applicants fared without consideration of other racial or ethnic groups was a fatal error by the district court. The Fourth Circuit held there was no disparate impact because Asian-American applicants were the only racial or ethnic group to receive offers notably in excess of its share of the applicant pool in 2021, producing the highest admissions “success rate” of any such group. According to the Fourth Circuit, the facts also precluded a finding of discriminatory intent. Because the record did not demonstrate that the School Board adopted the policy to bring hardship to Asian-American students, and the policy was not only “facially race-neutral” but also “fully race-blind” (by restricting evaluators’ access to candidates’ name, race, ethnicity, and sex), the Coalition did not establish the requisite discriminatory intent for an Equal Protection Clause claim. As a result, the Fourth Circuit assessed the policy under the rational basis standard review. In reversing the decision by the district court, the Fourth Circuit held that “[e]xpanding the array of student backgrounds in the classroom serves, at minimum, as a legitimate interest in the context of public primary and secondary schools” and because that was “the primary and essential effect of the challenged admissions policy[,]” it was “rationally based.”
This outcome is not without dispute. In his dissent to denial of the writ, Justice Alito wrote that the U.S. Supreme Court should “wipe [the Fourth Circuit] decision off the books” and cautioned against its use as a “blueprint for evading” Students for Fair Admissions, Inc. v. President and Fellows of Harvard College. Thus, while inaction by the U.S. Supreme Court in Coalition for TJ v. Fairfax County School Board suggests that race-neutral admissions policies are presently defensible, educational institutions must nevertheless be mindful of the intent and effects of their admissions policies and the potential for further action by the U.S. Supreme Court in this space. --- Erin Jones Adams
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“The new law bans gender-affirming surgeries and hormone therapies, and restricts mental health care for transgender individuals under 18.”
Why this is important: On January 24, 2024, Ohio’s Senate voted to override a veto by Governor Mike DeWine banning gender-affirming care for minors and restricting transgender women’s and girls’ participation on sports teams. With respect to gender-affirming care, the new law bans surgeries and hormone therapies. Under a grandfather clause, the law allows individuals who are currently receiving services to continue to receive those services (but prevents the receipt of additional services). The new law also restricts mental health care for transgender individuals under age 18. With respect to athletic participation, the measure bans transgender girls and women from women’s sports teams at both the K-12 and collegiate levels. The new law is expected to take effect approximately 90 days after its passage. With the passage of this law, Ohio joins other states, including West Virginia, Idaho, and Louisiana, with similar bans that are already in effect.
Governor DeWine originally vetoed the legislation to protect parents and children from government overreach on medical decisions. Nevertheless, during the first week of January 2024, he signed an executive order banning gender-affirming surgeries for individuals under the age of 18. This occurred despite medical professionals maintaining that such surgeries were not occurring in Ohio.
Gender-affirming care has been available in the U.S. for over a decade and is endorsed by major medical associations. However, at least 23 states have laws enacted either restricting or banning gender-affirming medical care for transgender minors. Many of those states are facing lawsuits over the legislation. For example, Arkansas’ law was struck down by a federal judge who indicated the ban on care violated the due process rights of transgender minors and their families. In Alabama, the U.S. Court of Appeals for the Eleventh Circuit vacated the temporary injunction that blocked enforcement of the ban imposed by Senate Bill 184, but a subsequent en banc petition for rehearing has stalled enforcement of the ban. The U.S. Court of Appeals for the Sixth Circuit reversed preliminary injunctions that blocked the bans in both Kentucky and Tennessee.
In addition, at least 20 states currently have laws banning transgender athletes playing on K-12 and collegiate sports teams. However, the Biden administration currently has a proposal in development to forbid such outright bans under Title IX.
What is clear is that states and appeals courts do not agree on the constitutionality of these new laws. Do they violate due process? Do they unnecessarily or needlessly intrude into the private medical decisions families make? Do they pass muster under the current version of Title IX? How will the new Title IX regulations impact these laws? Given the large number of states dealing with both forms of bans and the even larger number of families impacted by the same, it is likely only a matter of time before one or both of these issues is appealed to our nation’s highest court. --- Lisa M. Hawrot
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“The spooky-sounding phenomenon can harm student applicants, needlessly burden university employees and lead to financial aid theft.”
Why this is important: Though Halloween is well in the rearview, “ghost students” are not as explained in this article. “Ghost students” (or “straw students” per ED) are scammers who present themselves as legitimate prospective students, participate in the application process, enroll in classes, and use their fake identities to abuse school-provided cloud-based storage, access and perpetrate scams and theft using schools’ VPN and school-issued email addresses, and even apply for and receive financial aid. Unlike actual students, “ghost students” have no plans to attend school or obtain their degree, but instead strive to use school resources to steal, commit fraud, and engage in other unlawful acts. As this article highlights, the implications of these actions are costly and burdensome, ranging from serious operational disruptions (such as increased work for admissions professionals, loss of seats for real applicants and students, erroneous enrollment projections and figures, and engagement of instructors to teach unnecessary class sections) to loss of financial aid and data breach.
A press release issued by ED last year underscored the significance of the threat. At that time, three women were arrested on a federal grand jury indictment, which alleged they operated a federal student aid fraud scheme that used the identities of California prison inmates and other fraud victims to enroll in state community colleges and obtain federal student loans. Posing as “straw students” according to ED, the defendants allegedly applied for federal student aid using the FAFSA and directed the funds to bank accounts they controlled in violation of federal regulations, which require that federal student-loan funds to be used only for paying the cost of attending an institution of higher education. ED stated that as a result of their alleged scheme, the defendants fraudulently caused the United States Treasury to disburse approximately $980,000 in Federal Student Aid funds on behalf of “straw students.”
At a time when educational institutions need and want to make the application process more accessible to offset enrollment shortfalls and support prospective students, a highly technical approach that asks more of applicants is not ideal. Solutions that may strike the appropriate balance include identity management and cybersecurity software that require visual verification of a student during the application process and waiting to issue school email addresses until students physically verify their identity in person irrespective of their online or virtual learning status. The bottom line: to mitigate the risk of “ghost student” disruptions and liability, admissions professionals and information technology teams should be partnering to assess and develop best practices, policies, and procedures for guarding against this form of admissions-related fraud. --- Erin Jones Adams
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More Relief Set for Student Loan Borrowers | |
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By Lisa M. Hawrot
A new announcement from The White House has an additional 153,000 borrows set to receive more debt relief. These borrowers will receive an email that their remaining federal student loan debt is cancelled. Specifically, the email will be sent to some borrowers who are enrolled in the SAVE (Saving on a Valuable Education) plan, which launched in August 2023. Borrowers who have been making at least 10 years of payments and originally took out $12,000 or less for college may qualify. For every $1,000 borrowed over and above that amount, an additional year is added before a borrower can receive relief. The White House estimates that approximately $1.2 billion in debt will be cancelled.
Click here to read the entire article.
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