Bond Market Research Spurs Congressional Action

July 14, 2016
Accounting, Diversity

Research from Duke University's Fuqua School of Business suggesting racism in the higher education bond market has fueled efforts in Washington to tackle the problem.

Professor Bill Mayew found historically black colleges and universities pay more to float bonds in the market than other schools. He also found evidence race was a factor in the higher costs.

Mayew's research attracted attention in Congress and is a factor in ongoing efforts to address the financial disadvantages for HBCUs, including a bill introduced by U.S. Rep. Alma Adams to increase their access to capital.

The HBCU Capital Financing Improvement Act passed the House July 11 and has been referred to the Senate Committee on Health, Education, Labor, and Pensions.

"Access to federal funding is a challenge that most HBCUs are faced with, but under the HBCU Capital Financing Program the playing field is leveled," Adams said.

Mayew said solutions to offset the financial burden for HBCUs can come from changing specific features of the bond market as well as easing the ability of HBCUs to access capital from other sources.

"The HBCU Capital Financing Improvement Act does the latter by amending certain provisions of the Higher Education Act of 1965 such that HBCUs can better take advantage of the existing HBCU Capital Financing Program," he said.

Also, on July 12, at the request of four senators and congressmen, the U.S. Government Accountability Office agreed to investigate the barriers facing HBCUs when financing capital projects.

Mayew discussed his research in a packed meeting of congressional and HBCU leaders in Washington D.C. July 13. The event was hosted by the Democrats Committee on Education and the Workforce, the Congressional Black Caucus, the new Congressional HBCU Caucus and Rep. Keith Ellison of Minnesota.

With about 120 people in the meeting room and an overflow crowd outside, Mayew explained that the findings reflect a situation that is not new.

"It's not that this data didn't exist," he said. "It was just hard to compile."

Rep. Ellison met Mayew to discuss his findings earlier this year after the research went public.

"I hope we go beyond just having an interesting conversation here, and focus on what are we actually going to do," Ellison said at the D.C. event. "I'm walking out of here thinking about what the game plan is going to be."


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