CARES Act – Higher Education Emergency Relief Fund (HEERF) I FAQs
Institutions can use unspent institutional HEERF I funds, as of December 27, 2020 (enactment date of CRRSAA), under the expanded and allowable uses of HEERF II.
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?
HEERF Quarterly and Annual reports are required. There are several elements which are required to be reported each quarter on your institutions website for the CARES Act HEERF student portions, institutional, HBCU, TCCU, MSI, and SIP. For more information and details on what should be reported, please see the USDOE’s Reporting and Data Collections webpage.
4. What data are institutions required to report for Institutional and Other HEERF (HBCU, TCCU, MSI, SIP, FIPSE, and IREPO?
The USDOE developed “Budget and Expenditure” form for quarterly reporting of HEERF Institutional, MSI, and SIP expenditures. See USDOE’s Reporting and Data Collections webpage for the form, which should be filled out and linked to your main website, similar to the student portion reported information.
5. 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).
6. 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.
7. 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
8. 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).
9. How can Emergency Student Financial Aid funds be used?
On October 14, 2020, the U.S. Department of Education (USDE ) issued a HEERF FAQ Rollup document which combines several other guiding documents and provides 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
- Students exclusively enrolled in online programs before March 13th are not eligible
10. How can Institutional Funds be used?
On October 14, 2020, the U.S. Department of Education (USDE) provided a HEERF FAQ rollup document on Institutional Fund uses. This document combines several guidelines and conditions that 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
- NEW DIRECTION – Loss of Revenue: Institutions cannot use the funds to defray losses of revenue.
- 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.
11. What is the deadline (project period or period of performance) for institutions to spend HEERF funds received under the CARES Act?
All institutions were given 1 calendar year (365 days) from the date of award in their HEERF Grant Award Notification (GAN) to complete the performance of their HEERF grant.1 Therefore, for example, if a grantee received a GAN on April 7, 2020, the one calendar year period of performance for their HEERF grant would be through April 6, 2021. Please note that after the end of the year-long period of performance, grantees have an additional 90 calendar days to liquidate their obligations made during their year-long period of performance as part of the grant closeout procedures (2 CFR § 200.343(b)).
12. Is it possible for institutions to request an extension of time to expend HEERF funds?
The Department understands that some grantees, even given the emergency nature of the HEERF grant, may be unable to obligate funds by this time. Consequently, no-cost extensions (NCEs) of up to 12 months are available as provided for in 2 CFR § 200.308(d)(2). NCEs may not be exercised merely for the purpose of using unobligated balances. Given the emergency nature of HEERF grants, the Department does not intend an NCE to extend longer than 12 months. HEERF grantees are encouraged to discuss any need for an NCE with their respective program officer well in advance of the end of their grant period of performance.
HEERF II General FAQs
1. Is the HEERF II funding new funding or does this allocation also include the CARES Act HEERF I funding?
The Higher Education Emergency Relief Fund II (HEERF II) is authorized by the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), Public Law 116-260, signed into law by President Donald J. Trump on Dec. 27, 2020. This funding is an additional amount of funding to the HEERF I funds authorized on March 27, 2020.
2. When can we expect to receive HEERF II funds?
The funds became available January 14, 2021; the day the US Department of Education (USDOE) announced and posted the information on their website.
3. Why does the initial Federal Grant Award Notice have the prior budget dates?
The USDOE will reissue GANs. The initial GANs have the wrong budget term.
4. What is the deadline (project period or period of performance) for institutions to spend HEERF funds received under the CARES Act?
The HEERF II require funds be spent within one-year. For HEERF I, the start date is based on the certification and agreement date, and the HEERF II start date is based on the GAN date. All institutions were given 1 calendar year (365 days) from the date of award in their HEERF Grant Award Notification (GAN) to complete the performance of their HEERF grant.1 Therefore, for example, if a grantee received a GAN on April 7, 2020, the one calendar year period of performance for their HEERF grant would be through April 6, 2021. Please note that after the end of the year-long period of performance, grantees have an additional 90 calendar days to liquidate their obligations made during their year-long period of performance as part of the grant closeout procedures (2 CFR § 200.343(b)).
HEERF II Student Portion FAQs
5. What amount of HEERF II funds must my institution devote to financial aid grants to students?
The CRRSAA requires that institutions receiving HEERF II funding provide the “same amount” of funding in financial aid grants to students that it was required to provide under its original Student Aid Portion (CFDA 84.425E) allocation amount, as listed on the CARES Act Section18004(a)(1) allocation table (HEERF II). See the allocation columns in green for your respective allocation amounts.
HEERF II Institutional Portion FAQs
6. How has the use of funds changed for institutional uses?
Institutions have expanded flexibility in their use of supplemental Institutional Portion funds (CFDA 84.425F). Under section 18004(c) of the CARES Act, institutions were required to use their Institutional Portion awards to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus and/or for additional emergency financial aid grants, subject to certain limitations.
In contrast, allowable uses under the CRRSAA for Institutional Portion awards include:
- Defraying expenses associated with coronavirus (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll);
- Carrying out student support activities authorized by the Higher Education Act of 1965, as amended (HEA), that address needs related to coronavirus; and
- Making additional financial aid grants to students (as described in Question 8).
Similar to what was required for Institutional Portion awards under Section 18004 of the CARES Act and the Department’s Certification and Agreement for those funds, under section 314(d)(3) of the CRRSAA, no supplemental Institutional Portion awards or new Institutional Portion awards may be used to fund contractors for the provision of pre-enrollment recruitment activities; marketing or recruitment; endowments; capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship; senior administrator or executive salaries, benefits, bonuses, contracts, incentives; stock buybacks, shareholder dividends, capital distributions, and stock options; or any other cash or other benefit for a senior administrator or executive.
7. Can institutions charge indirect costs against the HEERF I institutional portion?
It depends. If institutions have remaining HEERF I funds, as of 12/27/2020, those funds can cover indirect cost at the federally approved indirect cost rate, or at the 10 percent di minimus, if an institutions does not have a federally approved indirect cost rate.
8. Can institutions charge HEERF I Institutional portion for lost revenues?
It depends. If institutions have remaining HEERF I funds, as of 12/27/2020, those funds can cover lost revenues.
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.|
On Monday, March 8, the US Department of Education issued a HEERF Audit Letter which provides an overview of the Higher Education Emergency Relief Fund (HEERF) grant program auditing requirements. This letter applies to HEERF grant funds provided under the CARES Act (HEERF I), the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (HEERF II), and any HEERF grant funds that may be provided under the American Rescue Plan (ARP) (HEERF III).
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