LOS ANGELES — Treasury Secretary Steven T. Mnuchin on Friday stepped up his criticism of elite private schools that have received federal loans under the Paycheck Protection Program, calling on those with “significant endowments” to return the funding, which is designed to help small businesses affected by the coronavirus crisis.
Mnuchin’s remarks, shared in a tweet, came a day after the Los Angeles Times published a story reporting that Brentwood School — the exclusive K-12 facility in West L.A. that his children attend — had received a PPP loan.
The school, which according to the Internal Revenue Service had an endowment of about $17.4 million in 2017, told The Times on Thursday that the loan for an undisclosed sum would help it navigate a future that could include “a potential decline in enrollment and charitable giving, accompanied by increased demand for financial assistance and other escalating expenses.”
The Treasury secretary’s spokeswoman on Thursday said that he “does not think it’s appropriate” that “private schools with endowments have taken out these loans.”
Brentwood School on Friday did not immediately respond to a request for comment regarding Mnuchin’s call for PPP loans to be returned.
Officials at several other elite L.A. area private schools told The Times that their institutions opted to not apply for PPP loans, which are forgivable if certain parameters are met.
Harvard-Westlake School in Los Angeles and Studio City, Marlborough School in Hancock Park, Crossroads School for Arts & Sciences in Santa Monica, and Flintridge Preparatory School in La Cañada Flintridge did not apply for the funding, representatives of each school said. Polytechnic School in Pasadena said that it received a PPP loan last week but decided Thursday to return it.
This week, Mnuchin has been critical of another well-heeled L.A. organization that received a PPP loan. In a CNBC interview Tuesday, he called it “outrageous” that the Los Angeles Lakers received a now-returned $4.6 million PPP loan.
Allocations of $660 billion PPP funding — a component of the federal CARES Act that was signed into law March 27 — have come under intense scrutiny, with several high-profile businesses and organizations, including Shake Shack Inc., saying they would give their loan back after facing public pressure. Mnuchin has threatened to hold participating companies criminally liable if they do not meet criteria for the program, whose loans are designed to help pay for workers’ salaries.
Founded in 1972, Brentwood’s board members include actress Calista Flockhart and investor Lance Milken, son of billionaire Michael Milken, the former junk bond king. Tuition at the school, which has more than 1,100 students spread across two campuses, ranges from $37,500 a year for K-5 students to $44,000 for sixth through 12th grades.
“The dramatic and enduring impacts of COVID-19 will continue to affect our school financially, and in other ways, over the course of at least the next year,” the school said in its previous statement.
Brentwood has said that salaries and benefits for faculty and staff are the school’s largest operating expense, and it noted that its endowment “does not contribute interest income to our operating budget.”
“We rely on donations beyond tuition revenue each year to balance our budget,” the school said.
Private prep schools may not be the first entity that comes to mind when considering aid for small businesses. But that’s what they are, and times are tough for many of them, said Mary Menacho, interim executive director for the California Association of Independent Schools, the organization for 224 private schools in the state.
“All of these schools are small businesses when it comes down to it … (and) have really bent over backwards to keep their programs going and their people employed,” Menacho said.
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