Dear Colleagues:
First a quick update on the status of the COVID package – The Republican and Democratic leadership of the House and Senate met at 4:30 p.m. today and are scheduled to meet again at 7pm today. In addition, there are rumors that Speaker Pelosi and Leader McConnell will keep Congress in session until they pass a coronavirus relief deal, the strongest signal yet that they are close to a deal. These are apparently the first substantive meetings between the four leaders in months – which is a good sign. So again, some movement – fingers crossed – it could all come together.
On that note, I wanted to provide you a summary of the language in the bipartisan/bicameral COVID-19 package under discussion in DC specific to the State, Local & Tribal Assistance and the Education Stabilization Fund. These issues are not so much the challenge of the larger conversations, so should give us an idea of what to expect if and/or when the bill comes together.
I will continue to monitor this – please feel free to reach out with questions.
State Local and Tribal Assistance:
$160 Billion for state, local, and tribal assistance. This will provide $152 billion in aid to states and local governments through the Coronavirus Relief Fund and $8 billion in direct funding to Tribal nations.
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- 1/3 of the $152 billion would be distributed based on each state’s proportion to the U.S. population
- 2/3 of the $152 billion would be distributed based on the proportion of each state’s revenue losses relative to the total revenue losses of all states nationwide
- Each state is entitled to a minimum of $500 million
The state funding would be distributed in three tranches:
- First tranche: $50.66 billion from the population-based funding will be dispersed to states within 30 days of enactment. In addition, needs-based funding that tracks actual revenue losses incurred by state and local governments from April 1, 2020 to September 30, 2020 relative to the same period in 2019 will also be dispersed within 30 days of enactment.
- Second tranche: Needs-based funding that tracks revenue losses incurred by state and local governments from October 1, 2020 to March 31, 2021 relative to the same period in 2019 will be dispersed no later than June 1. It is expected that an additional $52 billion will be dispersed in this tranche, totaling $142 billion with inclusion of Tranche 1.
- Third tranche: At least $10 billion must be set aside for this final tranche. This is also a needs-based allocation that provides the remaining funding based on the proportional revenue losses of each state from April 1, 2021 to June 30, 2021, relative to the same period in 2019. It is expected that $10 billion will be dispersed in this tranche, totaling $152 billion with inclusion of Tranches 1-2.
Tribal Funding: $8 billion in funding for tribes would be allocated by 60 percent population and 40 based on the number of employees of each tribal entity.
Governors must distribute 40 percent of the state funding to local governments, but they have discretion on how it distributed from below:
- Proportional population
- Proportional revenue loss
- Combination of both
- There are no population thresholds, so every county and municipality would be eligible for funding regardless of size.
- Extend the deadline for spending CARES Act, Coronavirus Relief Fund, aid on COVID-related expenses through December 31, 2021.
- Guardrails would prohibit the use of these funds to cover enhanced pension obligations. In addition, states cannot expand public pension benefits while receiving funds.
Education Stabilization Fund (“ESF”)
$20B for Institutions of Higher Education is included in the bipartisan package. It is less than what was in the April CARES package ($30B), and less than what Senate Republicans were initially proposing of $29B. However, the bottom line is we are hearing through APLU that Congressional Democrats see the legislation as a down payment on future action next year – so we are hopeful for an additional round of funding to come.
The ESF this round does provide a bit more flexibility within both the Institution and Student Aid focused pots of money. The formula for allocating that funding is a 50/50 FTE/Headcount solution which would split the difference on the divisive formula issue splintering the higher ed community – and one we advocated against as it would pit us against our community college partners. Student grants can be used for any component of the student’s cost of attendance, which at this point, we presume to include includes tuition. The bill does include clarifying language that allows the funding to be allocated as “determined solely by the institution,” which APLU believes would avoid some of the restrictions on which students are eligible for grants imposed by Secretary DeVos. There is still some concern about the eligibility of undocumented students given other statutory restrictions, but APLU has indicated as expected lawyers will be very engaged in that review.
APLU provided the summary below of the legislation as drafted which you may find helpful as well:
Total Funding within the Education Stabilization Fund – $82 billion
Subtract some set asides for “outlying areas” and programs operated by the Bureau of Indian Education
Governors Emergency Education Relief Fund – $7.5B
Higher Education Emergency Relief Fund – $20B
Elementary and Secondary School Relief Fund – $54B
$20 billion in a Higher Education Emergency Relief Fund
- 85% of which is provided to public and nonprofit institutions of higher education under a CARES like formula for institutions except now 50/50 FTE/headcount formula and not inclusive of for-profit institutions
- 37.5% Pell FTE (not exclusively enrolled in distance education courses prior to a qualifying emergency)
- 12.5% FTE non Pell (not exclusively enrolled in distance education courses prior to a qualifying emergency)
- 37.5% Pell headcount (not exclusively enrolled in distance education courses prior to a qualifying emergency)
- 12.5% nonPell headcount (not exclusively enrolled in distance education courses prior to a qualifying emergency)
- 10% Title III/V HBCUs, MSIs, Strengthening Institutions program recipients
- 5% for a competitive grant program within the Fund for the Improvement of Postsecondary Education (FIPSE) to “institutions the Secretary determines through an application process not less than 90 days have the greatest unmet needs…”
Under the main pot of funding (85%), an institution must provide at least 50 percent of its funding to students in the form of financial aid grants, which can be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as food, housing, course materials, technology, health care, or child care with any such students receiving such grants determined solely by the institution. Institutions may use a maximum of 50 percent of its funds to defray 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).
Institutions that paid the endowment excise tax receive half of the funding and may only use its funding for student grants.
Maintenance of Effort requirement:
A State’s application for funds to carry out sections 5102 or 5103 of this subtitle shall include assurances that the State will maintain support for elementary and secondary education, and State support for higher education (which shall include State funding to institutions of higher education and state need-based financial aid, and shall not include support for capital projects or for research and development or tuition and fees paid by students) in fiscal year 2021 and 2022 at least at the levels of such support that is the average of such State’s support for elementary and secondary education and for higher education provided in the 3 fiscal years preceding the date of enactment of this Act. (b) WAIVER AUTHORITY.—The Secretary may waive the requirement in subsection (a) for the purpose of relieving fiscal burdens on States that have experienced a precipitous decline in financial resources.
Governors Emergency Education Relief Funding
The GEER program looks very similar to the one in the CARES Act. However, $2.5B of the $7.5B is for “Emergency Assistance to Non-Public Schools grants.” This pot of funding looks like it was designed to settle a dispute between Republicans and Democrats on K-12 funding of private institutions.