(Photo by Visitor7 via Creative Commons/Wikipedia)
One reason the American Bar Association recently yanked Thomas Jefferson School of Law’s accreditation was concerns about its current and anticipated financial resources.
The U.S. Department of Education under Secretary Betsy DeVos is apparently less worried about the San Diego law school’s fiscal situation.
In criticizing the ABA’s accreditation decision, which Thomas Jefferson plans to appeal, the school said it had strengthened its finances.
One example Thomas Jefferson gave was the Department of Education relieving it of having to post a $3.1 million letter of credit to the department. Interim Dean Linda Keller said the DOE took this step because of the school’s improved financial situation.
“This was done after assessing the audited financial records of the law school in accordance with federal regulations,” Dean Keller wrote in a recent email. “The DOE uses an objective test to determine a school’s composite score for financial responsibility. Ours was in excess of the required level.”
The DOE also removed Thomas Jefferson in March from its “Heightened Cash Monitoring” list that the school had been on since December 2015 due to financial responsibility concerns.
A DOE spokesman confirmed that a review of Thomas Jefferson’s audited financial statements for fiscal year 2018 resulted in “a passing financial composite score for that fiscal year.” As a result, the department released Thomas Jefferson from the letter of credit requirement and heightened cash monitoring earlier this year, he said.
The spokesman noted that the law school originally had to post the letter of credit in order to continue participating in the federal financial aid program. The requirement was instituted after a review of the school’s fiscal year 2017 audited financial statements, he said.
The $3.1 million letter of credit “represented 10 percent of the Title IV program funds received by the institution” during the most recently completed fiscal year, according to the DOE.
Letters of credit are financial instruments issued by a financial institution, typically a bank, on behalf of a school to the DOE.
“Funds from a letter of credit may be drawn in part or whole by the department to reimburse the department for student refunds, loan cancellation costs, and may be used with the institution’s agreement to cover the expense of teach-outs when an institution closes,” a DOE webpage states.
The National Student Legal Defense Network criticized the DOE’s actions involving Thomas Jefferson. In a Twitter thread, the network noted that one of the reasons the ABA had initially put Thomas Jefferson on probation in November 2017 was financial concerns.
“Almost 2 years later ABA reaffirms financial problems,” the student network tweeted. “Cue Betsy DeVos concluding the school can keep the $3.1 million insurance policy taxpayers have against a failing school!”
An ABA spokesman did not provide a comment on the DOE’s actions relative to Thomas Jefferson’s finances.
The law school could raise DOE’s new stance on its financial picture as part of its appeal of the ABA’s accreditation decision. Thomas Jefferson will remain accredited while the appeals process plays out.
In its statement calling the ABA’s accreditation action “capricious,” Thomas Jefferson also said the school has eliminated $42 million in debt in recent years. It was able to do so as part of transactions surrounding its move from a state-of-the-art $90 million facility to several floors in a downtown San Diego office building.
The smaller footprint has helped the school save millions of dollars compared to its lease in its old building, according to the dean.
Lyle Moran is a freelance writer in San Diego who handles both journalism and content writing projects. He previously reported for the Los Angeles Daily Journal, San Diego Daily Transcript, Associated Press, and Lowell Sun. He can be reached at lmoransun@gmail.com and found on Twitter @lylemoran.