Higher Education Emergency Relief Fund, Update October 14, 2020

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In case you missed it, the Office of Postsecondary Education hosted a Higher Education Emergency Relief Fund (HEERF) webinar on October 14, 2020. A copy of the PowerPoint is available here. The panelists included, among others, Diane Auer Jones, Principal Deputy Under Secretary, Robert L. King, Secretary for Postsecondary Educations, and Chris McCaghren, Deputy Assistant Secretary for Higher Education Programs. As titled, the webinar’s intended focus was on reporting obligations, but there was also a lengthy discussion on how to properly use HEERF to cover lost revenue. We tackle the key takeaways below.

Inconsistent Guidance – Lost Revenue

The biggest question tackled was, whether you can use (a)(1) Institutional Portion funds to cover lost revenue. The short answer, explained in more detail below, is no – which may be inconsistent with responses you received from the HEERF Team (via email inquiries to HEERF@ed.gov).

The Department acknowledges that it provided inconsistent advice on this topic, with the Under Secretary expressly saying “it is possible that you received inconsistent answers” and “we apologize.” She clarified that the Department was “not trying to mislead,” schools but that “some things were not obvious” based on the way the statute is written.

Although an open apology is refreshing, the Department did not have a clear answer for what schools should do if they acted on the prior inconsistent advice and used (a)(1) Institutional Portion funds to cover lost revenue. Instead, the Department punted saying that it needs to speak with specialists in accounting and auditing and will “get back to” participants. We will track this key issue and update you with any instructions.  

Webinar Clarification – Lost Revenue

So, what is the more detailed answer to whether lost revenue is an allowable expenditure under the (a)(1) Institutional Portion of HEERF? According to the Under Secretary, the “key” is that you have an expenditure that is linked to a cost, a bill, or an invoice, etc. that is related to changes in the delivery of instruction due to coronavirus. In other words, the Under Secretary directs you to ask yourself “am I paying a cost, paying a bill, and is this something above and beyond what I would have had to pay and is that cost/bill a direct result of changes we had to make because of Covid.” *Notably, this same limitation does not apply to (a)(2) and (a)(3) funds. You can use (a)(2) and (a)(3) funds for general lost revenue (which, the Under Secretary confirms, does include loss of state appropriations).

Webinar Examples – Lost Revenue

Here are some examples to explain the Department’s new guidance:

  • You reduce class sizes to allow for social distancing. This means that you need to bring on additional faculty members to teach the additional sections. You cannot use the (a)(1) Institutional Portion funds to pay the original faculty member, but you can use the (a)(1) Institutional Portion to pay the additional faculty members.
  • You double cleaning staff due to COVID. You cannot use the (a)(1) Institutional Portion funds to pay the original cleaning staff members, but you can use the (a)(1) Institutional Portion to pay the additional cleaning staff members.
  • You purchase more or different cleaning supplies due to COVID. You cannot use the (a)(1) Institutional Portion funds to pay for the cleaning supplies you purchase year after year, but you can use the (a)(1) Institutional Portion to pay the delta.
  • You reduce housing density (e.g., one student per room) due to COVID. You cannot use the (a)(1) Institutional Portion funds to cover general lost revenue, but you can use the (a)(1) Institutional Portion to offset costs associated with running the dorms. [The Under Secretary seemed to suggest this -- let’s say you have 50 percent fewer students in your dorm in order to account for social distancing guidelines. You could pay 50 percent of the electricity bill using (a)(1) Institutional Portion funds].
  • You rent off-campus apartments to account for reduced on-campus housing density. These students pay you a housing fee. There is a delta between what you pay the building in rent and what you get from the students in housing fees. You can use the (a)(1) Institutional Portion to pay the delta.
  • You purchase additional lab supplies so that lab students do not need to share supplies due to COVID. You cannot use the (a)(1) Institutional Portion funds to pay for the supplies you purchase every year, but you can use the (a)(1) Institutional Portion to offset costs associated with purchasing additional supplies.
  • You upgraded your existing Zoom contract to account for more users. You cannot use the (a)(1) Institutional Portion funds to pay what you would have paid under the original contract, but you can use the (a)(1) Institutional Portion to pay the delta for the upgrade. [So, if your contract was $20K and you now have to pay $30K due to the additional users, you can use the (a)(1) funds to pay the $10K delta.]
  • You cannot use (a)(1) Institutional Portion funds to create scholarships in order to cover costs a student would have had to pay otherwise. But if the student has to now pay additional fees because of the disruption, e.g., would now be required to pay for access to an online library, you could use the (a)(1) Institutional Portion to cover those fees.
  • Notably, the Department was stumped by this question: If a school was ordered to close the campus by the State and yet retained its staff given the obligation to avoid layoffs “to the greatest extent practicable,” can the school use its (a)(1) Institutional Portion to cover the staff salaries for the portion of time the school was closed? There was obvious confusion amongst the panelists in how to best respond to this inquiry, as they agreed it may depend on “how the staff were utilized.” Without a clear answer, the Under Secretary said that we may see a new FAQ on this issue. On a related note, however, the Department did confirm that a school is not, per se, “disqualified” from using HEERF funds if it had to lay off “some” employees. But they did reiterate that you are encouraged to maintain as many employees as possible to the greatest extent practicable.

Reporting Requirements Overview

The Department provided the following chart to address reporting.

See also: https://www2.ed.gov/about/offices/list/ope/heerfreporting.html

Reporting Requirements – Key Takeaways

  • For the (a)(1) Student Portion, you should continue to follow the May 6 guidance (as modified on August 28, 2020) by posting the required information on your primary website. The Department is tracking these websites. Its tracker, as of October 9, 2020, is available here: HEERF Student Aid Reporting Spreadsheet. Please check the link for your school to ensure it is active and accurate. If you note any problems, notify HEERFreporting@ed.gov. We can help you craft this response if needed.
  • For the (a)(1) Institutional Portion, you must complete the Quarterly Report form. First reports must be publicly posted on the institution’s website by October 30, 2020, covering the period from the date of the first HEERF grant award through September 30, 2020. The webinar also suggested that you email a copy of the Quarterly Report to HEERFreporting@ed.gov. Please note, the Department advised that it circulated a draft version of this form to institutions in late September. Do not use the draft form, as changes have been made. Also note, this same form is used for (a)(2) and (a)(3) funds and so there may be some categories listed here that would not be proper for (a)(1) Institutional Portion use.
  • For (a)(2) and (a)(3) funds, you must complete the Quarterly Report form. This Quarterly Report must be posted on your primary website by October 30, 2020 and then email a copy of the report to HEERFreporting@ed.gov.
  • The Annual Reporting that will be required is still in the development stage. We will track this issue.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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