In a story yesterday on the Education Department's minority scholarships policy, a word was dropped from a sentence about the distinction between private funds and a college's own funds. The sentence should have read, "Both sides said they could see no basis in the law" for such a distinction. (Published 12/20/90)

The Bush administration yesterday moved to end a week-old controversy over aid to minority students, promising that no scholarships will be affected for the next four years.

President Bush denied there had been a "a flip-flop" and said the modified policy would "continue these minority scholarships as best we can."

"I've long been committed to them," he said at a news conference with regional editors. "I've long been committed to affirmative action."

The new policy outlined by the Education Department earlier in the day did not completely reverse the regulations announced last week and did not retract the department's contention that "race specific" scholarships are discriminatory. But by imposing a four-year "transition period" it seemed designed to buy the political breathing room White House aides have sought to defuse what Michael L. Williams, the assistant education secretary who initiated the regulations, conceded yesterday was a "firestorm" of criticism.

Williams insisted at a news conference that his initial ruling "was legally correct, supported by current federal law. It was also consistent with most recent practice at OCR {the department's office of civil rights}, but it was indeed politically naive."

The new policy he described did not appear to mollify many critics.

"We think the department is confused," said Richard Rosser, president of the National Association of Independent Colleges and Universities. "They really have not thought through what they're doing. We have another interpretation that is highly questionable. The law hasn't changed, the cases haven't changed, all that has changed is Mr. Williams's intepretations."

Williams's original decision last week reinterpreted regulations issued under the Civil Rights Act of 1964 and held that "race exclusive" scholarships were discriminatory. The department has authority to cut off federal funds to colleges that commit such violations.

Williams justified his ruling by citing two Supreme Court cases that restricted minority set-asides in medical school admissions and municipal contracts. But civil rights lawyers said the federal government had allowed scholarships based on race since 1964 and that the cases cited by Williams did not apply to student aid decisions.

They pointed out that three times between 1982 and 1989 the department upheld race-based scholarships and rejected or ignored the Supreme Court cases cited by Williams.

His announcement initially came as a surprise to senior White House officials, who had not cleared the decision beforehand, and touched off a heated debate within the administration. White House counsel C. Boyden Gray led the new policy's supporters, who argued it conformed with the "colorblind" approach that conservative Republicans have advocated.

Opponents included Health and Human Services Secretary Louis W. Sullivan, the only black Cabinet member, and other administration officials who argued that Williams's ruling would damage political relations with minorities.

The department yesterday completely reversed itself on the specific issue that spurred the controversy, the plan by organizers of the Fiesta Bowl to donate $200,000 to the two state universities that are scheduled to play in the football game New Year's Day.

The game's organizers had planned to make the donation in an effort to defuse criticism for holding it in Arizona, which has rejected establishing the Rev. Martin Luther King Jr.'s birthday as a holiday. Williams, however, said the organizers could only give the money directly to students. The universities themselves could not participate in awarding the scholarships because they were race-specific.

Yesterday Williams said that colleges that receive federal funds can in fact accept private donations that are specifically earmarked for minority student scholarships. But he said private colleges cannot use their own money for such scholarships and suggested that the Supreme Court has held that public colleges cannot provide them out of state or local government funds.

Such a use of government funds, he said, was a constitutional issue for the courts to decide rather than an administrative issue for his office to handle.

Rosser said he did not understand how privately earmarked scholarships could be permissible, but ones paid for from a college's own funds could not be. "Where in the heavens did he {Williams} get any kind of legal precedent for that?" he said.

Although no data exists on race-based scholarships, Rosser estimated that most are funded by colleges' own funds, not earmarked gifts.

Williams said that because of "the evident confusion" on these issues, none of the restrictions will go into effect for four years "in order to permit universities to review their programs . . . and to assure that any students under scholarship, or being evaluated for scholarship, do not suffer."

But he said that during this period, the department would continue to investigate any complaints about "race exclusive" scholarships. It was unclear whether enforcement action -- which could include a cutoff of federal funds -- might result from those complaints.

Still allowed to offer race-based scholarships, as they were under Williams's original ruling, are colleges under court order to award them to remedy segregation and private organizations that do not accept federal funds. Also exempt are the Patricia Roberts Harris fellowships that Congress has reserved for groups underrepresented in higher education.

Ralph Neas, executive director of the Leadership Conference on Civil Rights, said Williams's initial ruling had embarrassed the administration and now "it seems like Mr. Williams tried to cover that embarrassment with a confusing statement. It's almost purposefully confusing."

Robert H. Atwell, president of the American Council on Education, an umbrella organization of higher education groups, said: "If that was a retraction, it was no retraction. Nice try, but it didn't work. It confused the situation even further."

Benjamin L. Hooks, executive director of the NAACP, said: "We are not totally satisfied with all of the points enunciated by Mr. Williams and take the position that this matter cannot be considered resolved until the status quo is restored."

Conservative activists, who favored the initial ruling, accused the administration of bending under political pressure.

"We think the original policy statement was a correct statement of law, and is a correct statement of law," said John Scully, counsel to the Washington Legal Foundation, which has filed complaints about minority scholarships at the University of Florida and Florida Atlantic University and is considering a suit over yesterday's decision.

"The current press release is a substitution of bad politics for good law," Scully said.

Williams started his news conference with a slip of the tongue, saying: "I'm here today to announce what is a new political, a new, um, position of the Department of Education."

He denied being pushed by the White House to revise his ruling. "I was not ordered by anyone to overrule anything, and neither was the department," he said. "This decision was reached in a consultative process" that was "a very agreeable, cordial process."

And Williams, who is black, denied being "a lackey" for the white establishment. "I'd like to suggest to you, I haven't been a lackey for anyone. The position I took . . . was a position I took because I thought it was right," he said.

Williams indicated he was surprised by the resulting uproar, saying the department had advised against race-based scholarships on four occasions since 1986. "It didn't seem that this was anything out of the ordinary," he said.

Pressed about how he could be unaware of the extent of race-based scholarships, Williams smiled, tilted his head and replied: "I have a better idea of the extent now."