CARES Act – Higher Education Emergency Relief Fund (HEERF) FAQs
1. What are the various allocations funded through CARES Act HEERF?
The CARES Act provided the following allocations under HEERF. See the US Department of Education (USDE) webpage for more details.
|HEERF by Allocation Type|
|USDE Effective Date||Allocations Type||Opportunity Number||CDFA||CARES ACT SECTION||Certification of Agreement Deadlines|
2. Do I have to submit a separate Certification of Agreement for each type of allocation?
Yes. Each allocation listed above must have a separate certification of agreement because each provides distinct uses for the funds and reference the applicable sections of the CARES Act. In addition, each allocation type has a specific opportunity number and corresponding CFDA number. These two corresponding numbers are required in G5 to receive and drawdown the appropriate funds.
3. What are the reporting requirements for the Student Aid portion of the HEERF allocations?
On August 28, 2020, the USDE posted a Revised Notice for the Student Share Public Posting Requirement for HEERF Grantees. The Department is publishing a revised Electronic Announcement (EA), originally dated May 6, 2020, that describes the public reporting requirements for Emergency Financial Aid Grants to Students. This revised EA, in conjunction with approved information collection under OMB control number 1801-0005, requires grantees receiving awards under Section 18004(a)(1) of the CARES Act to publicly post certain grant information on the institution’s primary website as part of the reporting requirements under Section 18004(e) of the CARES Act. This revised EA maintains the same seven reporting elements, but it adds a clarifying footnote for reporting item four and decreases the frequency of reporting after the initial 30-day period from every 45 days thereafter to every calendar quarter.
Grantees posting a 45-day report on or after August 31, 2020 should instead post a report every calendar quarter, with the next calendar quarter report due by October 10, 2020 and covering the period from after their last 45-day or 30-day report through the end of the calendar quarter on September 30, 2020. The revised reporting notice is available in the Federal Register.
4. What data will the Department require institutions to report after disbursement of the Recipient’s Institutional Costs?
As explained in the Funding Certification and Agreement for the Institutional Portion of the HEERF, the institution should be prepared to report the use of the funds for Recipient’s Institutional Costs, demonstrating such use was in accordance with Section 18004(c), accounting for the amount of reimbursements to the Recipient for costs related to refunds made to students for housing, food, or other services that Recipient could no longer provide, and describing any internal controls Recipient has in place to ensure that funds were used for allowable purposes and in accordance with cash management principles. The Department will publish a notice in the Federal Register to provide instructions to institutions on these reporting requirements. The Department encourages institutions to keep detailed records of how they are expending all funds received under the HEERF.
Per HEERF, for the HEERF Institutional portion, if the recipient made awards to other entities, they are required to comply with the FFATA requirement by reporting the awards information on FSRS. However, if they did not make any awards, then they are not required to report on the FSRS. Other requirements are being considered/developed and will be posted on the Federal Register when finalized.
5. What are the reporting requirements for the Historically Black Colleges and Universities (HBCU), Tribally Controlled Colleges and Universities (TCCU), Minority Serving Institutions (MSI), Strengthening Institutions Programs (SIP), and Funds for Improvement of Postsecondary Education (FIPSE) portion of the HEERF allocations?
Recipient will comply with all reporting requirements including those in Section 15011(b)(2) of Division B of the CARES Act and submit required quarterly reports to the Secretary, at such time and in such manner and containing such information as the Secretary may reasonably require (See also 2 CFR 200.327-200.329). The Secretary may require additional reporting in the future under Sections 15011(b)(2) and Section 18004(e), including but not limited to reporting on the use of the award for Recipient’s Expenses, demonstrating such use was in accordance with Section 18004(a)(2) or (3), accounting for the amount of reimbursements to Recipient for costs related to refunds made to students for housing, food, or other components of the student’s cost of attendance that Recipient could no longer provide, and describing any internal controls Recipient has in place to ensure that funds were used for allowable purposes and in accordance with cash management principles. For grants made to students, the Recipient should maintain records on how grants were distributed to students, how the amount of each grant was calculated, and any instructions or directions given to students about the grants. Recipient also should maintain records on the amount of each grant awarded to each student for production only upon the request of a federal agency.
For the FIPSE program funded under Section 18004(a)(3), the USDE provides a Budget and Expenditure Reporting Form.
Per HEERF, if the recipient made awards to other entities, they are required to comply with the FFATA requirement by reporting the awards information on FSRS. However, if they did not make any awards, then they are not required to report on the FSRS. Other requirements are being considered/developed and will be posted on the Federal Register when finalized.
6. Will the HEERF allocations be audited by the federal government?
Yes. The HEERF allocations are subject to the federal single audit (district’s annual audit).
7. Are COVID-19 Expenditures Exempt from 50% Law?
Yes. Trailer Bill AB 94 – Postsecondary Education Trailer Bill exempts COVID-19 Expenditures from the 50% law and requires a community college district to exclude from that computation any expenditures incurred by that district during a state or local declared emergency related to the COVID-19 pandemic that are not otherwise normal expenditures that would have been incurred by that district. The exemption is in effect through July 1, 2021.
8. Are CARES Act emergency financial aid grants (under section 3504, 18004, or 18008) to Students required to be included as gross income and taxable?
No. Emergency financial aid grants under the CARES Act for unexpected expenses, unmet financial need, or expenses related to the disruption of campus operations on account of the COVID-19 pandemic, such as unexpected expenses for food, housing, course materials, technology, health care, or childcare, are qualified disaster relief payments under section 139 of the Internal Revenue Code. This grant is not includible in your gross income.
See the IRS FAQs page for more details https://www.irs.gov/newsroom/faqs-higher-education-emergency-relief-fund-and-emergency-financial-aid-grants-under-the-cares-act
9. How did the Federal Government determine the total amount of CARES Act funding each college would receive?
The CARES Act stipulates a funding formula to divide these funds among institutions. The formula has two distinct parts:
- 75% of the funds will be awarded based on the institution’s fulltime in-person Pell grant recipients as a share of the national total.
- 25% of the funds will be awarded based on the institution’s fulltime in-person enrollment who are not Pell Grant recipients as a share of the national total.
The CARES Act then divides the Formula Funds into two categories based on conditions for their use:
Emergency Student Financial Aid
At least 50% of funds must go to emergency financial aid for students. Also referred to as the Advanced Funds, Emergency Financial Aid Grants to Students, Section 18004 Student Funds, or CARES Act Student Aid Funds)
The remaining balance can be used at the institution’s discretion to cover costs associated with the interruption of instruction and significant changes to the delivery of instruction due to the coronavirus. Institutions may also use the funds to make additional emergency financial aid grants to students, provided that such emergency financial aid grants are for expenses related to the disruption of campus operations due to coronavirus. (Also referred to as Recipient’s Institutional Costs Funds, Institutional Portion of the Higher Education Emergency Relief Fund, and Section 18004 Institutional Funds).
10. How can Emergency Student Financial Aid funds be used?
On April 21st, the U.S. Department of Education (USDE ) issued a technical FAQ, providing further guidance and clarification on the emergency student aid funds.
At least 50% of the funds each institution receives must go towards emergency student financial aid for expenses related to the disruption of campus operations due to coronavirus, including eligible expenses under a student’s cost of attendance (e.g., food, housing, course materials, technology, healthcare, and child care).
The U.S. Department of Education guidelines for emergency CARES Act grants that stipulates:
- The funds can only be used to provide direct grant assistance to students
- Colleges must make these funds available to students as soon as possible
- Institutions cannot use these funds to reimburse themselves on any incurred costs or expense, including refunds or aid previously issued to students
- Institutions cannot use these funds to pay outstanding or overdue student bills to institutions
- Institutions have discretion over how to award aid with a few provided guidelines instead of mandates
- Institutions should prioritize students with the greatest need and factor in student socioeconomic status
- Institutions can elect to award aid to all their students aid or award aid only to those who have demonstrated need
- USDE recommends, but does not require, using the maximum Federal Pell grant (for the 2019-2020 academic year, $6,195) as the maximum amount of aid awarded to each student
- Financial aid administrators should exercise “professional judgement” on a case-by-case basis to exclude this emergency aid from a student’s cost of attendance
- Emergency aid will not be counted as Title IV financial aid
- Funds can only be awarded to students who are eligible for Title IV funding, thereby prohibiting aid from going to most non-US citizens
- Students exclusively enrolled in online programs before March 13th are not eligible
11. How can Institutional Funds be used?
On April 21st, the U.S. Department of Education (USDE) provided a technical FAQ on Institutional Fund uses. Based on the USDE April 21st Letter from Secretary DeVos, Funding Certification and Agreement, and FAQ, the following guidelines and conditions apply to the institutional use allocation:
- Institutions need to have first signed the student aid funding certificate to access these funds
- Should institutions choose, they can convert their institutional use funds to provide additional emergency financial aid to students under the same rules as the already issued agreement
- USDE urges institutions, especially well-resourced schools and universities with substantial endowments, to “devote the maximum amount of funds possible to emergency financial aid grants to students, including some or all of the funds earmarked for Recipient’s Institutional Costs” (Section 3 of the Funding Agreement)
- Institutions may not use these funds to provide emergency grants to students who were enrolled exclusively in online or distance education programs prior to March 13th
- Institutions have reasonable discretion on how they use the money as long as they can demonstrate a valid connection between the eligible expense and “significant changes to the delivery of instruction due to the coronavirus” (Section 4 (b) of the Funding Agreement)
- Institutions can use the funds to reimburse themselves for student refunds (e.g., room and board, tuition, and other fees) or technology (e.g., laptops, hotspots) they purchased for students, if done so on or after March 13th
- Institutions cannot use the funds for executive salaries or benefits or for the provision of pre-enrollment recruitment activities such as marketing and advertising
- Institutions that accept funds are required to continue to pay employees and contractors to the greatest extent practicable based on the unique financial circumstances at each institution will need to submit quarterly reports to USDE to demonstrate that they used the funds for qualified purposes and to account for how much of the funds were used to reimburse refunds
- Institutions should spend the funds within one year of the date of the certificate of agreement.
HEERF Quarterly Reporting Requirements for CARES Act section 18004(a)(1) Institutional Share, (a)(2), and (a)(3) awards
Community College Districts are required to report on the CARES act funds for section 18004(a)(1) Institutional Share, (a)(2), and (a)(3) awards each quarter. Institutions are required to publicly post the first reports on their website by October 30, 2020, covering the period from the date of the first HEERF grant award through September 30, 2020. A draft of the Quarterly Budget and Expenditure Reporting form and instructions and the below HEERF Reporting Requirement table are available for further details on the U.S. Department of Educations (USDE) webpage.
The following FAQs were prepared to help understand the reporting requirements:
- Who is required to report on the HEERF expenditures?
All HEERF grantees that received a Section 18004(a)(1), (a)(2) or (a)(3) award.
- What do I do if I have expended all my HEERF grant funds?
For student portion, indicate on the main webpage that the report is final and covers all remaining HEERF fund expenditures. For institutional portion, check the box on the form that it is the "final report" that covers all remaining HEERF fund expenditures. All institutions that received any HEERF award will still have to submit an annual report in early 2021 to the Department regardless if at that time they still have HEERF funds or not.
|HEERF Reporting Requirement Table|
|Reporting Requirement||Method of Reporting||Due Dates||Report Frequency||Substance of Report|
|Section 18004(a)(1) Student Portion Public Reporting||Publicly post on institution’s primary website||Update no later than 10 days after the end of each calendar quarter (September 30, and December 31, March 31, June 30)||Quarterly, (October 10, January 10, April 10, July 10).||Information specified in our May 6, 2020 Electronic Announcement, which was updated in a Federal Register notice published on August 31, 2020.|
|Section 18004(a)(1) Institutional Portion, (a)(2), and (a)(3) Public Reporting||Publicly post on institution’s primary website, where student portion is reported||First report due October 30, 2020 covering the period from first award through September 30, 2020.||Quarterly, (January 10, April 10, July 10, October 10).||Not yet finalized, but please see our draft form available here. See also our Federal Register notice here inviting public comment on the form.|
|Annual Reporting||Report submitted to the Department via a portal system currently in development.||Intended first annual report due in early 2021.||Yearly. Submission is required of all HEERF grantees.||Not yet finalized, but draft form is in public comment period. See our Federal Register Notice here and Form and Instructions and Supporting Statement here.|
Recipients of the CARES Act should report the following elements on their main webpage every quarter:
(1) An acknowledgement that the institution signed and returned to the Department the Certification and Agreement and the assurance that the institution has used, or intends to use, no less than 50 percent of the funds received under Section 18004(a)(1) of the CARES Act to provide Emergency Financial Aid Grants to Students.
(2) The total amount of funds that the institution will receive or has received from the Department pursuant to the institution's Certification and Agreement for Emergency Financial Aid Grants to Students.
(3) The total amount of Emergency Financial Aid Grants distributed to students under Section 18004(a)(1) of the CARES Act as of the date of submission (i.e., as of the initial report and every calendar quarter thereafter).
(4) The estimated total number of students at the institution eligible to participate in programs under Section 484 in Title IV of the Higher Education Act of 1965 and thus eligible to receive Emergency Financial Aid Grants to Students under Section 18004(a)(1) of the CARES Act.
(5) The total number of students who have received an Emergency Financial Aid Grant to students under Section 18004(a)(1) of the CARES Act.
(6) The method(s) used by the institution to determine which students receive Emergency Financial Aid Grants and how much they would receive under Section 18004(a)(1) of the CARES Act.
(7) Any instructions, directions, or guidance provided by the institution to students concerning the Emergency Financial Aid Grants.
1. For the purposes of this report, institutions may determine the number of eligible students based on the number of students for whom the institution has received an Institutional Student Information Record (ISIR) plus the number of students who completed an alternative application form developed by the institution for this purpose. The institution may then apply this number to its own methodological framework for disbursal of funds to produce a final total of eligible students at the institution. The institution is not asked to make assumptions about the potential eligibility of students for whom the institution has not received an ISIR or an alternative application.
CARES Act Sec 18004(a)(1) Funds Accounting Guidance
Audit Requirements and Allowable Uses
CARES Act funds are subject to audit. Districts must be able to provide reports to demonstrate that funds were used for allowable purposes. Expenditures of CARES Act funds will be included in the districts’ audit reports on the Schedule of Expenditures of Federal Awards (SEFA) using CFDA number 84:425E.
The disbursement provided for by Sec. 18004(a)(1) of the CARES Act requires that, of the amount allocated to each institution, no less than 50 percent must be used to provide students with emergency financial aid grants to help cover expenses related to the disruption of campus operations due to coronavirus. The remaining 50 percent of funds may be used to cover any costs associated with converting courses to distance education.
Institutions may use the funds to provide student refunds and reimburse themselves for costs, on or after March 13, 2020, the date of the President’s Proclamation, resulting from significant changes to the delivery of instruction, including interruption in instruction, due to the coronavirus, including:
- Recipient’s institutional costs to provide refunds for room and board, tuition, other fees
- To make additional emergency financial aid grants to students for food, housing, course materials, technology, health care, and child care
- To award scholarships to provide payment for future academic terms
- Purchase equipment or software, pay for online licensing fees, or pay for internet service to enable students to transition to distance learning
- Purchase computers or other equipment to donate or provide to students
Some expenditures of CARES Act funds are strictly disallowed, including payment to contractors for pre-enrollment recruitment activities; endowments; or capital outlay for athletic facilities, sectarian instruction, or religious worship.
The CARES Act also provides for the Secretary of Education to allocate an additional award or grant under Sec. 18004(a)(2) for minority serving institutions or Sec. 18004(a)(3) for smaller institutions particularly impacted by coronavirus, as determined by the Secretary. If your college receives these funds, those additional funds may be used to defray expenses (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll).
Additional federal guidance, including the Recipient’s Funding Certification and Agreement and a CARES Act Frequently Asked Questions about the Emergency Financial Aid Grants to Students, is available on the U.S. Department of Education’s CARES Act webpage.
Accounting Requirements for CARES Act Funds
CARES Act Revenue:
- Funding is restricted and must be accounted for as Federal Revenue following guidance in the California Community Colleges Budget and Accounting Manual (81xx).
CARES Act Expenditures:
- Each institution may develop its own system and process for how to allocate CARES Act funds to students.
- Funds are restricted in nature and should be accounted for separately using a unique COVID19 program code/identifier to easily pull COVID19 cost reports.
- All expenditures should follow the existing BAM classifications. Expenditure classification is dependent on the nature of the expenditure.
- Direct aid to students should be accounted for in other outgo (7xxx) object code.
Example Journal Entry - Student Aid Portion
Each institution may determine how to account for and distribute the CARES Act funds, as long as the requirements noted above are met. As an example, the first disbursement for direct aid to students could be recorded as follows:
- Fund Code – 74 Student Financial Aid
- Object (Account) Code – Distinct 81xx for CARES Act funds
- Object (Account) Code – 75xx for cash grants/aid
- Activity (Program) Code – 7320xx Student Aid
Example Journal Entry - institutional Portion
Each institution may determine how to account for and distribute the CARES Act funds, as long as the requirements noted above are met. As an example, COVID19 related expenditures could be recorded as follows:
- Fund Code – 12 General Fund – Restricted
- Object (Account) Code – Distinct 81xx for CARES Act Funds
- Object (Account) Code – 4000 Supplies and Materials
- Activity (Program) Code – 65xx COVID19-Facilties Disinfecting