Setting up an HSI Guarantee: how could we do it and why would it be beneficial for multiple parties?

by Deborah Santiago and Janette Martinez

Providing a guaranteed amount of funding for Hispanic-Serving Institutions (HSIs), regardless if they’ve applied for a Title V grant, sends a core message of commitment and support for Hispanic-Serving Institutions. In a previous post, we argued that to more equitably support Latino student success, via the institutions that educate them, all HSIs should receive annual funding. How would the guarantee work and how much money would institutions receive? In this brief, we detail current allocation processes for funding for HSIs, including Title V grants and CARES Act funding; we then provide options for a potential funding set up of the HSI guarantee; we follow with allowable uses for the guarantee; and close with potential benefits for the US Department of Education (ED) if this guarantee were put in place. There is past precedent for allocating funding for every Title V eligible HSI, and if the HSI guarantee had been available in Fiscal Year (FY) 2019, institutions who qualify for the HSI guarantee would have received up to $100,000. This funding could be helpful in setting up institutions to apply for Title V competitive grants in the future, and ED would have an up-to-date list of all currently eligible Title V HSIs.

Allocation process

Each fiscal year, Congress sets the annual appropriation level for the Title V, Part A (Developing HSIs) program. ED first uses their appropriation to fund previously awarded grants. Title V grants are awarded over five years, and the continuing annual grants are known as non-competitive continuing (NCC) grants. After funding the NCC grants, ED either opens a new competition or funds applications from a previous competition that did not receive an award that year, known as funding down the slate. There has been a new competition every other year since FY 2015 (Table 1).

ED has provided funding to every Title V eligible HSI in the past, so there’s a precedent and framework for allocating this funding. In response to the COVID-19 pandemic, Congress passed the CARES Act, which included over $14 billion in funding for institutions of higher education, including a set-aside for Minority-Serving Institutions, including HSIs. ED allocated funds to each institution that was designated eligible for Title V in FY 2019. ED provides an annual list of designated-eligible Title V eligible HSIs, which provides a mechanism through which ED can provide the HSI guarantee funds.

Strategies for distribution

Below, we consider three different options to determine 1) how much of the Title V, Part A allocation would be reserved for the HSI guarantee, 2) which institutions would receive a grant, 3) how much would each institution receive. In all the scenarios, NCC grants would be the priority for allocation and funding for the HSI guarantee would be distributed after funding NCCs.

First, some key data from FY 2019.

· $124.4 million dollars were appropriated for the Title V, Part A program.

· There were 539 Hispanic-Serving Institutions.

· There were 436 HSIs that were designated Title V eligible by ED.

· 180 institutions received a NCC grant.

· 43 institutions received a new Title V grant, totaling $24.6 million in new grants.

Option A below assumes that a) only institutions that are not currently receiving a Title V grant will receive the HSI guarantee and b) there would not be a new competition that year.

· Since there are 436 Title V eligible HSIs and 180 were already receiving a Title V grant, that means 256 HSIs did not receive a Title V grant and thus would be eligible for the HSI Guarantee.

· After subtracting the NCC grants distributed from the total appropriation, there were about $25.8 million Title V funds left.

· If each institution received an equal HSI Guarantee grant, they would receive about $101,000.

Option B below keeps the same assumption that only NCC grants would be distributed but all Title V eligible institutions would receive the HSI guarantee. Divided evenly, each institution would receive about $59,000.

Option C below assumes 10% of the annual appropriation for Title V would be set aside just for the HSI guarantee. Only HSIs that did not receive either a Title V grant that year would receive the HSI Guarantee.

· After subtracting the NCC grants and the 10% set aside, there would be $13.4 million for new grants.

· Assuming new grants total $600,000 each (the typical maximum Title V award), an additional 22 institutions would receive a grant.

· In this situation, each institution would receive about $59,000.

Use of allocation

Under these three potential scenarios, HSIs could receive anywhere between $59,000 and up to $100,000 in a given year. This amount could help plan and prepare for an application for a competitive Title V grant. In fact, the Higher Education Act allows for a planning grant for Hispanic-Serving Institutions for one year for “the purpose of preparation of plans and applications for a grant under [Title V].” These grants are not used as often because institutions might find it easier to apply for a Title V grant and have to complete one fewer application in an already multi-step process. The HSI guarantee would provide this funding to less-resourced institutions and set them up to compete with larger institutions for various HSI grants, not just the Title V grants.

Benefits for ED

The HSI Guarantee provides an incentive for institutions to apply for Title V eligibility and helps ED keep the most current list of eligible HSIs. Currently, an institution needs to apply to be designated eligible to apply for a Title V, Part A grant. In addition to meeting the definition of an HSI (accredited, nonprofit, degree-granting institution with at least 25% Hispanic full-time equivalent enrollment), an institution must also have low-core expenses and a high enrollment of needy students. Additionally, an institution might be an HSI based on their most recent enrollment data that has not been submitted to ED, but can be submitted to be designated eligible. When the CARES Act funding was distributed to HSIs, 57 HSIs did not receive funding because they had not applied for Title V eligibility.

The HSI Guarantee can be an important down payment closing equity gaps in higher education that the Biden administration has made a priority. In the Discretionary Budget request for FY 2022, the Biden administration called for an increase in funding for institutional capacity programs, including the Title V program. Additional funding for these programs can significantly help those institutions disproportionately enrolling and graduating Latino students. In the meantime, the HSI Guarantee can help fill the need for many institutions as they work to improve their own institutional capacity to serve their students.

Additional Considerations:

The amount of the HSI guarantee could change from year to year as the number of institutions eligible and the annual Title V appropriation changes. Additional questions to consider include the following:

· Does Title V, Part B, impact who receives funds?

· In past years, ED has distributed 10–12 new grants without holding a full competition as money remained in the appropriation. Should there be a threshold for when the ED distributes new funds or instead, increases the HSI guarantee amount?

· Should there be a set-aside for administration of the Title V program?

· Should the amount of the HSI guarantee vary by the institution’s undergraduate enrollment or should every institution receive a flat amount?