CARES Act Institutional Relief Funds and IT Expenses

The following information was initially shared with the EDUCAUSE community in response to a message posted to the CIO Community Group electronic discussion list on May 21, 2020. The message asked about the availability of guidance on whether Coronavirus Aid, Relief, and Economic Security (CARES) Act institutional funds could be used to cover online learning expenses associated with the COVID-19 pandemic.

The Higher Education Emergency Relief Fund FAQ lays out the following context in regard to how institutions can use funds made available under the CARES Act:

The CARES Act establishes and funds the Higher Education Emergency Relief Fund (HEERF). Sections 18004(a)(1) and 18004(c) of the CARES Act, which address the HEERF, allow institutions of higher education to use up to 50 percent of the funds they receive to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus so long as such costs do not include payment to contractors for the provision of pre-enrollment recruitment activities, including marketing and advertising; endowments; or capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship (collectively referred to as "Recipient's Institutional Costs").¹

However, the following text from the agreement that institutions have to sign in order to get the institutional portion of their HEERF allocation is what tells the tale: "Recipient retains discretion in determining how to allocate and use the funds provided hereunder, provided that funds will be spent only on those costs for which Recipient has a reasoned basis for concluding such costs have a clear nexus to significant changes to the delivery of instruction due to the coronavirus."²

The agreement goes on to say that the institution can use funds from its institutional allocation to reimburse itself for "hardware, software, or internet connectivity that Recipient may have purchased on behalf of students or provided to students."³ This point is reinforced in the FAQ (see question four). Meanwhile, the FAQ also states that "institutions may use the funds for Recipient's Institutional Costs to pay a per-student fee to a third-party service provider, including an OPM, for each additional student using the distance learning platform, learning management system, online resources, or other support services . . . ."⁴

Probably the broadest statement on the potential use of funds appears in the cover letter from the secretary of education regarding the overall process for distributing the institutional portion of the HEERF aid. "I encourage you to use the portion of your award for Recipient's Institutional Costs to expand your remote learning programs, build your IT capacity to support such programs, and train faculty and staff to operate effectively in a remote learning environment . . . . I also encourage you to consider using the funds for Recipient's Institutional Costs to expand support for your students with the most significant financial needs . . . including eligible expenses under a student's cost of attendance, such as course materials, technology, health care, childcare, food, and housing."⁵

These pieces of guidance from ED provide institutions with a great deal of latitude in determining how to use funding made available through the CARES Act, and with that flexibility comes a heightened risk of the institution being second-guessed from a compliance perspective down the road. With that in mind, institutional representatives should take great care to document the "clear nexus to significant changes to the delivery of instruction" for a given expense. As the ninth question in the FAQ states, "The Department encourages institutions to keep detailed records of how they are expending all funds received under the HEERF."⁶ It is possible that the pending reporting requirements mentioned in the FAQ could provide more guidance. Until those are available, however, identifying and documenting a clear connection between an expense and the institution's emergency shift to remote delivery of instruction (where the March 13, 2020, national emergency declaration is the starting point for allowable expenses, per the institutional agreement) remains the best bet for colleges and universities in limiting their potential compliance risk.

Notes

1. US Department of Education, Higher Education Emergency Relief Fund: Frequently Asked Questions about the Institutional Portion of the Higher Education Emergency Relief Fund under Section 18004(a)(1) and 18004(c) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Office of Postsecondary Education, updated May 21, 2020. ↩
2. US Department of Education, Recipient's Funding Certification and Agreement for the Institutional Portion of the Higher Education Emergency Relief Fund Formula Grants Authorized by Section 18004(a)(1) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Office of Postsecondary Education, updated May 21, 2020 (emphasis added). ↩
3. Ibid. ↩
4. US Department of Education, Higher Education Emergency Relief Fund: Frequently Asked Questions. ↩
5. Betsy Devos (Secretary of Education) letter to College and University Presidents, April 21, 2020. ↩
6. US Department of Education, Higher Education Emergency Relief Fund: Frequently Asked Questions. ↩

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Jarret Cummings is Senior Advisor for Policy and Government Relations at EDUCAUSE.