Federal Stimulus

General Information and FAQs

Per new direction from the U.S. Department of Education, issued on March 22, 2021, the HEERF I/II/III expenditures do not have to be directly related to changes in the delivery of instruction. The notification states that the HEERF funds may be used more broadly to defray the following costs:

• 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 a general guidance, to support institutional decisions on allowable expenditures and identifying students with exceptional need, each district or institution should document internal policies on interpretations of the various USDE guidance and FAQs, at any point in time, and maintain for audit purposes.

Note: Please continue to discuss and obtain guidance from your legal counsel and auditors on all HEERF questions.

1. What is the allowable time-period for which institutions may charge costs and lost revenue to the HEERF grant?
   On March 22, 2021, the U.S. Department of Education (USDE) issued a notice that all HEERF grants can cover COVID-19 related costs and lost revenues, as of March 13, 2020 onward.
2. What students qualify to receive HEERF Emergency Financial Aid Grants? (See Legal Advisory 2020-07 and ML Update on Student eligibility for HEERF II and III)
   Based on our court injunction, all students are eligible to receive HEERF Emergency Financial Aid Grants; however, for HEERF II, the USDE requires that institutions prioritize students with exceptional need and maintain documentation of determination.

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.

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)

Institutional 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 13^th 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 13^th
• 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.

13. 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. 

14. 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 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.

Student Outstanding Account Balances (See Updated FAQs for HEERF II, Question #11)

7. Can institutions use the HEERF grants to satisfy a student’s outstanding account balance?

Students may consent to apply their HEERF financial aid grant or a portion thereof, to pay off their student accounts, if desired; however, the institution must retain the student’s written or electronic consent and ensure student’s discretion to determine what costs should be covered with his or her financial aid grant funds.

HEERF II and III can also cover lost revenues associated with the COVID-19, such as enrollment fees and charges (including unpaid student accounts receivable or other student account debts). 

Payroll

8. What payroll costs can HEERF grants cover? (See Updated FAQs for HEERF II, Question #25)

Payroll and benefit costs associated with Coronavirus if (1) such costs are newly associated with coronavirus; and (2) costs incurred on or after March 13, 2020. This includes covering the costs of salaries and benefits for employees in dining halls and dorms who did not receive salaries and benefits from student housing fees due to COVID-19, disrupting campus operations. 

Lost Revenues (See USDE Lost Revenue FAQs) 

9. What is Lost Revenue?

Lost revenue refers to revenues an institution expected to receive but reduced or eliminated due to COVID-19. As such, lost revenue estimates are acceptable.

10. When may an institutions charge lost revenue to its HEERF grant award?

An institution may charge lost revenue to its grant at the end of the period that it is using to estimate lost revenue. If using the fiscal year period, then at the end of that period.

11. What are potential sources of lost revenue that may or may not be reimbursable under the HEERF grant programs?

12. How may an institution calculate its estimated lost revenue? (See table on page 6 and Question 9)

The CRRSAA does not specify how institutions may calculate their lost revenue. Accordingly, institutions have flexibility to calculate a reasonable estimated lost revenue. For example, an institution may use a year-over-year comparison using the prior year or a comparison using 3- or 5- year combined average as baseline revenue.

13. How will the effects of HEERF be reflected in SEFA and what year? (See Question 8)

HEERF II expenditures and lost revenue charged in fiscal year 2021 should be in the fiscal year 2021 SEFA because the award permitting the estimated lost revenue and expenses back to March 13, 2020, did not occur until fiscal year 2021.

Reimbursement of Indirect Costs (See USDE HEERF II FAQs #8)

An indirect cost rate allows an institution to recover a portion of administrative costs incurred to implement the federal grant programs. This rate is specified in an institution’s negotiated indirect cost rate agreement. If an institution does not have a current negotiated rate with its cognizant agency, for indirect costs, it may appropriately charge the de minimis rate of 10% percent of Modified Total Direct Costs (MTDC). If an institution has or had a negotiated rate, they cannot use the 10% de minimus. 

14. Can an institution claim indirect costs to the HEERF grants?

Yes, The HEERF II and III grants allow institutions to claim indirect costs and a reasonable amount of administrative costs.

15. Is there any guidance available for charging indirect costs to HEERF grants?

1. If your district has a federally approved negotiated rate, you need to use the base (salary and wage or MTDC) in your agreement for indirect costs.
2. If your district does not have a federally approved negotiated rate, use can use the 10% de minimus, which is based on the MTDC method (2 CFR 200.68) for indirect costs. (See example below).

a) Identify budgeted indirect costs allowable for inclusion or exclusion:

Expenses must be charged consistently

• Direct or indirect, but may not be charged as both
• De minimis rate must be used for all federal awards
• De minimis rate can be used indefinitely or until a negotiated rate is established.

Federal Stimulus Funds through the American Rescue Plan Act (ARP) of 2021 (HEERF III)

See HEERF III FAQs for more information related to HEERF III ARP.

General Overview Questions

1. Question: What are the changes between HEERF II and HEERF III?

   Answer: Congress made the following major changes in creating the HEERF III programs:

   • Provided approximately $39.6 billion of supplemental funding under the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) framework ($36 billion for public and private nonprofit institutions) with two new required uses of HEERF III institutional portion grant funds:
     • Implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines.
     • Conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances.

     More information on these new required uses is in Section D, Questions 28-35 of the Treasurer’s HEERF III FAQs.

   • Modified the share of (a)(1) funds that must be used for emergency financial aid grants to students.
   • Maintained a separate program for proprietary institutions.
   • Eliminated the CRRSAA requirements for institutions paying the endowment excise tax.

      

2. Question: How will institutions receive supplemental Student Aid and Institutional Portion grants?

   Answer: The Treasury Department will make supplemental awards to your existing Student Aid Portion and Institutional Portion grants. No action is required by your institution to receive these supplemental awards. The Project Director identified on the most current Grant Award Notification (GAN) will automatically receive an email indicating a supplement award is made to your institution.

   Note: Drawing down any amount of these supplemented funds constitutes your institution’s acceptance of the applicable terms and conditions under the ARP and as described in the Supplemental Agreements that will be emailed to the Project Director separately.

    

3. Question: If my institutions determines that it does not need some of the HEERF ARP supplement (HEERF III) funds, can we decline the award?

   Answer: Yes, any institution may decline its full award or a portion of its award. Institutions should submit the Voluntary Decline of HEERF Grant Funds by email to HEERFRefund@ed.gov by August 11, 2021.

   Emergency Financial Aid Grants to Students

4. Question: Which students are eligible to receive emergency financial aid grants?

   Answer: Students who are or were enrolled in an institution of higher education during the COVID-19 national emergency are eligible for emergency financial aid grants from the HEERF, regardless of whether they completed a Free Application for Federal Student Aid (FAFSA) or are eligible for Title IV. Institutions are directed to prioritize students with exceptional need (Pell Grants recipients or undergraduates with extraordinary financial need.

    

5. Question: How may students use their emergency financial aid grants?

   Answer: Emergency financial aid grants may be used by students for any component of their cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care) or childcare. Students determine how they may use their emergency financial aid grant within the allowable uses.

6. Question: Can an institution direct or control what students may use their emergency financial aid grants on?

   Answer: No. The student emergency financial aid grant is provided to the student, and may be used by the student for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care.

    

7. Question: Are emergency financial aid grants to students under the HEERF program considered taxable income?

   Answer: No. Emergency financial aid grants made by a federal agency, State, Indian tribe, higher education institution or scholarship-granting organization (including a tribal organization) to a student because of an event related to the COVID-19 national emergency are not included in the student's gross income. For more information, please see the Internal Revenue Service (IRS) bulletin Emergency aid granted to students due to COVID is taxable (March 30, 2021).

    

8. Questions: Should institutions include a student’s receipt of a HEERF emergency financial aid grant when calculating that student’s Expected Family Contribution?

   Answer: HEERF emergency financial aid grants received by a student under the CARES Act, CRRSAA, or ARP should not be counted as income when calculating a family’s EFC. The Department published the April 3, 2020 Electronic Announcement, “[a]ny aid (in the form of grants or low‑interest loans) received by victims of an emergency from a federal or state entity for the purpose of providing financial relief is not counted as income for calculating a family’s Expected Family Contribution (EFC) under the Federal Methodology or as estimated financial assistance for packaging purposes.”

   Institutional Uses of Funds

9. Question: What amount of ARP (a)(1) funds must my institution devote to emergency financial aid grants to students?

   Answer: The amount of ARP (a)(1) funds that a public and private nonprofit institution must devote to financial aid grants to students is based on of the formula contained in section 314(a)(1) of the CRRSAA:

   • 50 percent of the portion of its allocation received under subparagraphs (A)through (D) (the formula factors based on Pell and non-Pell recipients who were NOT exclusively enrolled in distance education prior to national emergency) for emergency financial aid grants to students, in accordance with ARP section 2003(7); and
   • 100 percent of the portion of its allocation received under subparagraphs (E) and (F) (the formula factors based on Pell recipients who WERE exclusively enrolled in distance education prior to the national emergency) for emergency financial aid grants to students, in accordance with CRRSAA section 314(d)(9).

   The Department calculated the institution’s ARP (a)(1) Student Aid Portion grant. See the ARP (a)(1) allocation table.

    

10. Question: What are the allowable uses of institutional funds?

    Answer: Under the ARP, similar to the CRRSAA, allowable uses under the HEERF III (a)(1) 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); and
    • Making additional emergency financial aid grants to students.
    • Grant expenses may be incurred back to March 13, 2020, the date of the declaration of the national emergency due to the coronavirus.

    Institutions receiving Federal grants must compliance with the Cost Principal contained in the 2 CFR part 200 subpart E of the Uniform Guidance.

     

11. Question: What uses of funds are unallowable for the HEERF grant programs (HEERF I, II, and III)?

    Answer: HEERF grant funds must not be used for:

    • Funding contractors for the provision of pre-enrollment recruitment activities;
    • Marketing or recruitment; (See Question 27 on reengagement activities)
    • 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;
    • Religious worship, instruction, or proselytization or equipment or supplies to be used for religious worship, instruction, or proselytization; or
    • Construction or purchase of real property (See Question 23, below).

       

12. Question: Can HEERF grants be used for minor remodeling?

    Answer: Yes. However, this is restricted to the definition of “minor remodeling” under 34 CFR § 77.1. Please see HEERF III FAQs, Question 24 for additional guidance. Minor remodeling means minor alterations in a previously completed building, for purposes associated with the coronavirus, including the extension of utility lines, such as water and electricity, from points bel\yond the confines of the space in which the minor remodeling is undertaken but within the confines of the previously completed building. Some examples of permissible minor remodeling may include, but are not limited to:

    • The installation or renovation of an HVAC system, to help with air filtration to prevent the spread of COVID-19.
    • The purchase of costs of the installation of “room dividers” within a previously completed building to increase social distancing.

       

13. Question: Can ARP funding be spent on payroll to defray costs associated with transitioning to remote learning, defraying expenses to hire more staff, or expanding class sections as a result of the impact of COVID-19?

    Answer: Yes, under certain circumstances. Institutions may use ARP, CRRSAA funds, and unspent CARES Act funds to pay for certain payroll costs, including employee benefits, if (1) such costs are newly associated with coronavirus and (2) the costs were incurred on or after March 13, 2020, the date of the declaration of the national emergency due to the coronavirus. Consistent with these principles, an institution may use ARP funds to pay students for internships and job training experiences that are aligned with local coronavirus-related recovery needs.

    For example, HEERF grant funds can be used to pay for any new staff, or repurposed staff, if the new or repurposed staff’s work is associated with coronavirus (e.g., contact tracers, IT staff, additional medical personnel, teaching assistants, offering smaller class sizes to support social distancing, etc.). HEERF grant funds can also be used to pay the salaries (from March 13, 2020 onward) of staff who were unable to work during a period of any full or partial campus closures due to the pandemic (e.g., cafeteria workers, maintenance staff, bookstore clerks, etc.). Finally, any additional/overtime work any staff incurred from March 13, 2020 onward associated with coronavirus (e.g., deep cleaning of dormitories, additional trainings to assist with transitioning to online learning, etc.) can be paid for with HEERF grant funds.

14. Question: Can my institution use ARP and other HEERF institutional grant funds to discharge student debt or unpaid balances to their institutions?

• Answer: Yes. Institutions may only use institutional grants to discharge student debt or unpaid balances by discharging the complete balance of the debt as lost revenue and reimbursing themselves through their HEERF institutional grants or by providing additional emergency financial grants to students (with their permission). The Department strongly encourages institutions to discharge such debt.

Please keep in mind that each student’s situation should be reviewed on a case by case basis, there is no blanket method that can be applied to wipe out debt, it depends on the student’s needs and the period in which the debt was incurred. Additionally, Question 22 (last paragraph) states that the use of federal funds for bad debts are prohibited under the federal uniform guide. See below for examples and situations of how the funds can be used. These funds should help students that were enrolled at some point during the pandemic.

The following examples are listed to provide guidance to institutions on handling these situations:

Example 1: Transcript withholding: A student who was enrolled in an institution at any point on or after March 13, 2020 with a now-completed degree owes an unpaid debt to the institution and could not obtain an official transcript until the debt is paid off.

Note: Per Title 5, Section 59410, the governing board of a community college district may not withhold grades or transcripts from students or former students in an effort to collect a debt.

Example 2: Enrollment hold: A student who is enrolled at the institution at any point on or after March 13, 2020 and in progress toward a degree is blocked from enrolling in the next term because of an unpaid balance.

Example 3: Transfer student: A student who is enrolled at the institution at any point on or after March 13, 2020 and has completed progress toward a degree is blocked from obtaining an official transcript to transfer their credits because of an unpaid balance.

Note: Per Title 5, Section 59410, the governing board of a community college district may not withhold grades or transcripts from students or former students in an effort to collect a debt.

The following are two possible solutions to address the three examples above:

Solution #1: Get affirmative written consent to provide an emergency financial aid grant to the student’s account:

• What the institution can do: Institutions can provide an emergency financial aid grant to the student in the amount of the outstanding balance through their HEERF grants, including associated fees and penalties. The Department encourages institutions to waive associated fees and/or penalties that may have resulted from delays, actions, or needs related to the pandemic.
• What the institution cannot do: Institutions cannot discharge a student’s outstanding account balance, without prior written consent from the student. As always, students have discretion about how they receive their grants, and institutions must receive affirmative written consent from students before using emergency financial aid grants to satisfy a student’s outstanding account balance. In obtaining such affirmative written consent, the Department encourages institutions to include a disclaimer whereby students are expressly notified that they have the ability to decline the emergency financial aid grant to pay off debts and instead may use the funds for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. Solution

  #2: Discharge the student’s outstanding balance and count it as lost revenue:

• What the institution can do: Institutions can discharge the complete balance of the debt as lost revenue and reimburse themselves through their HEERF grants, including associated fees and penalties that may have resulted from delays, actions, or needs related to the pandemic.
• What the institution cannot do: The institution cannot condition, nor imply that it will condition, discharging these funds on the condition the student takes any specified actions (i.e., no conditioning a discharge of debt on continued reenrollment). Additionally, institutions may only charge the debt as lost revenue and reimburse themselves through one of the HEERF programs (i.e., no double-dipping).

If the institution determines that the above examples and solutions are applicable, the institutions may proceed in applying HEERF to discharge student debt or unpaid balances. 

Waiver of State Required Enrollment Fees

In addition, the Chancellor's Office requested a temporary solution to state legislation requiring districts to charge students enrollment fees.

Education Code, Section 76300, authorizes community college districts to charge student fee of $46 per unit semester and authorizes the wavier of this fee for students who meet specified criteria.

Senate Bill 132 (Higher Education Trailer Bill Language), would authorize a community college district to use available emergency relief funds provided by the federal government to waiver this fee, if it is unpaid by a student due to the impacts of the COVID-19 pandemic, as specified. 

HEERF Survey Fall 2021 Summary (PDF)

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:

1. 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.

2. 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.

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.[1]

(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.

• Analysis of CARES Act - Federal Stimulus (PDF)
• Update on CARES Act Allocation (PDF)
• CARES Act Allocations Update (PDF)
• Legal Advisory 2020-07: Student Eligibility for CARES Act Emergency Aid (PDF)
• ML Update on Student eligibility for HEERF II and III (PDF)
• Order Granting Plaintiffs' Motion for Preliminary Injunction (PDF) 

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:

• Revenue
  • Fund Code – 74 Student Financial Aid
  • Object (Account) Code – Distinct 81xx for CARES Act funds
    
    
• Expenditures
  • 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:

• Revenue
  • Fund Code – 12 General Fund – Restricted
  • Object (Account) Code – Distinct 81xx for CARES Act Funds

• Expenditures
  • Object (Account) Code – 4000 Supplies and Materials
  • Activity (Program) Code – 65xx COVID19-Facilties Disinfecting

If you have any additional questions, please contact the Fiscal Standards Unit at fiscalstandards@cccco.edu or Lorena Romero, CCCCO Specialist at lromero@cccco.edu.