Several private schools in Charleston were awarded millions of dollars in emergency loans as part of the federal government’s response to the coronavirus pandemic, enabling the elite institutions to potentially offset the cost of their faculty and staff.
Officials with Porter-Gaud, a private school in West Ashley, said they received a $3.6 million loan through the Paycheck Protection Program, which is being managed by the U.S. Small Business Administration.
Ashley Hall, an all-girls school in Charleston, accepted a $2.2 million loan to cover the cost of its roughly 140 staff positions.
The Post and Courier also confirmed that Charleston Day, another prominent private school on the peninsula, received a loan through the program. But the school's administrators refused to say how much it qualified for.
Mason Preparatory, a Charleston K-8 private school, also received a loan. The head of school, Erik Kreutner, declined to disclose how much it received.
The money the schools received is part of the $659 billion that Congress appropriated for the new loan program that helps bail out struggling businesses and nonprofits whose finances were severely damaged by the public health crisis.
Porter-Gaud said it needed the federal assistance to make up for potential losses to enrollment and fundraising contributions this year.
"It really is all about protecting the teachers and the staff members that are the foundation of the school," said DuBose Egleston, who leads Porter-Gaud.
Ashley Hall suggested its loan was required to offset any financial troubles the school might face later this year.
"As a prudent institution, we recognize that we are in a fluid environment and uncertainty about the pace of re-opening will affect finances in the future," spokeswoman Paula Harrell said in a statement to The Post and Courier.
The rules set up by the SBA made the Charleston area schools eligible for the funding. And they aren’t the only ones to lay claim to the loans, which can be forgiven by the federal government if it is used to cover payroll costs.
Well-known preparatory schools in California, Virginia, Massachusetts and New Jersey all applied for the sought-after loans, according to the New York Times. St. Andrew’s Episcopal School in Maryland, where President Donald Trump’s youngest son is a student, also cashed in on the program.
Here in South Carolina, 89 schools had applied to the federal emergency loan program as of mid-April, according to survey responses collected from some 140 private and independent schools across the state. This does not include the 200 or so other schools that did not submit a response.
Most private and independent schools in the Palmetto State opted to close their doors in mid-March, around the same time Gov. Henry McMaster ordered public schools to halt in-person classes to slow the spread of the virus.
The decision to temporarily close has already taken a toll on some of their finances. Collectively, the private schools that submitted survey responses estimated they lost $19.7 million as a result of the pandemic during the 2019-20 school year.
The losses were attributed to nonpayment of tuition, a decrease in revenue from school lunches and athletic events and technology expenses associated with the transition to online learning.
But the hardest financial hit came from the schools’ inability to raise money like they normally would, said Spencer Jordan, director of the S.C. Independent School Association.
It’s unclear which other private schools in South Carolina applied for the loans or how many received the federal money.
The SBA has refused to release a full list of the loan recipients. As a result, the agency is being sued by a host of news outlets, including The Washington Post and The New York Times.
Meanwhile, the federal assistance provided to private classrooms has set off a national debate over whether the elite institutions truly need the funding to survive.
U.S. Treasury Secretary Stephen Mnuchin, whose agency helped develop the rules for the Paycheck Protection Program, has gone so far as to call on some of the schools to return the loans they received.
“It has come to our attention that some private schools with significant endowments have taken PPP loans. They should return them,” Mnuchin wrote on Twitter at the beginning of May.
To obtain the federal loans, the private schools had to attest that “economic uncertainty” made the loan request necessary to support “ongoing operations.” Essentially, they needed to promise that they would be unable to sustain their work without the funding.
That line in the application could be particularly important for the largest recipients in the program.
Mnuchin promised to audit all PPP loans totaling more than $2 million. And he’s threatened large, publicly traded companies that accepted loans with potential “criminal liability.”
The size of Porter-Gaud and Ashley Hall's loans puts them in exclusive company. Fewer than 1 percent of the 4.3 million loans distributed nationwide exceed $2 million, according to the most recent numbers provided by the SBA.
By comparison, the average loan approved for restaurants, small businesses and other recipients in South Carolina equaled roughly $99,000.
Egleston said the money Porter-Gaud received is absolutely necessary. Without the federal bailout funds, he said, the school may have been forced to lay off or furlough teachers.
As of mid-April, more than 50 private or independent schools statewide had been forced to lay off or furlough employees. Another 40 said they hadn’t made staffing cuts at the time but hadn’t ruled them out entirely.
The financial circumstances for each private school is different, Egleston said, and each school that received funding will need to decide whether to utilize it or return the federal financing.
Porter-Gaud has $18 million in its endowment, Egleston said. But most of that money is restricted, he said, meaning it can’t be used to cover general operating costs. Harrell declined to disclose how much is in Ashley Hall's endowment but said it is also a restricted fund dedicated to supporting student scholarships.
Mason Preparatory's endowment foundation is only five years old, Kreutner said. He declined to say how much sits in that fund but said that the school's fundraising efforts are not in the same league as some of the older, more established institutions in the Charleston area.
"You don't want to kill your reserves," he said, highlighting some of the potential financial fallout schools could face as a result of the pandemic, including enrollment declines and increased costs for cleaning supplies and protocol.
The biggest fear for many private schools is potential drops in enrollment for the next school year. Some families grappling with the economic downturn could opt to send their child to a tuition-free public school instead.
Even a slight decline in enrollment could undermine a private school’s finances, according to Jordan, with the state's independent school association.
That’s true at Porter-Gaud, too.
More than 90 percent of Porter-Gaud’s $26 million annual operating budget comes from student tuition, Egleston said, and he fears fewer parents will choose to pay between $22,000 and $26,000 to send their children to the private school this fall.
"Schools are really, really sensitive to enrollment fluctuations," Egleston said.
Much like colleges and universities across the state, Porter-Gaud has opted not to refund tuition payments for its grade school students this year since instruction has continued virtually. But the school hasn’t been able to collect payments from its preschool program, resulting in a significant revenue loss, Egleston said.
The school also put most of its planned capital projects on hold, including postponing the purchase of a new school bus.
That's unlikely to affect Porter-Gaud’s more than 1,000 grade school students in the meantime. Online classes and virtual instruction will continue through early June.