April 2020 Newsletter – School Districts

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)

On March 27, 2020, Congress passed the House Bill 748 (H.R. 748), entitled “Coronavirus Aid, Relief, and Economic Security Act” (or “CARES Act”), a $2.2 trillion economic stimulus package in response to the financial crisis our nation is experiencing as a result of the novel coronavirus, COVID-19. In addition to providing direct payments to individuals and expanding unemployment insurance benefits, the bill included $150 billion in stabilization funding for states and local governments with populations over 500,000. The CARES Act also included stabilization funding as follows:

  • $14.3 billion for higher education;
  • $13.5 billion for K-12 schools;
  • $5.3 billion for programs for children and families, including immediate assistance to childcare centers; and
  • $5 billion for Community Development Block Grants.

On April 3, 2020, the National Governors Association released a letter to the Secretary of Education, Betsy DeVos, asking the Secretary to distribute the funds earmarked for education to the states within two weeks and to allow the states “maximum flexibility” for how to use the money. (NGA, Letter to U.S. Department of Education Regarding Education Stabilization Fund (April 3, 2020), here.)

Discussed in more detail below are details of the CARES Act provisions impacting local educational agencies.

I. The Education Stabilization Fund

The CARES Act created the “Education Stabilization Fund” to provide states with $30.75 billion to support K-12 and higher education systems. (H.R. 748, Sec. 18001.) Congress created three funding streams under the Education Stabilization Fund: the Governor’s Emergency Education Relief Fund (H.R. 748, Sec. 18002), the Elementary and Secondary School Emergency Relief Fund (H.R. 748, Sec. 18003) and the Higher Education Emergency Relief Fund (H.R. 748, Sec. 18004). The amounts each state will receive is determined primarily by the particular state’s share of Title I of the Elementary and Secondary Education Act of 1965 (ESEA) and Pell Grant students. (H.R. 748, Sec. 18003(b).) Title I funding is the federal government’s primary funding program for high-poverty K-12 schools.  Higher education allocations in the CARES Act rely on “full-time equivalent” enrollments, not including distances education course enrollments prior to the coronavirus. (H.R. 748, Sec. 18004(b).) Using numbers reported in prior fiscal years, it appears that California may receive approximately $3.8 billion through the Education Stabilization Fund, including amounts allocated directly to California’s colleges and universities. (Center on Budget and Policy Priorities, How much will states receive through the Education Stabilization Fund in the CARES Act? (April 3, 2020), here.)

Further, to the greatest extent practicable, a local educational agency, State, institution of higher education, or other entity receiving funds under Education Stabilization Fund must continue to pay its employees and contractors during the period of any disruptions or closures related to coronavirus. (H.R. 748, Sec. 18006.)

A. Governor’s Emergency Education Relief Fund

The Governor’s Emergency Education Relief Fund will be approximately $3 billion, in total, to allow governors to use the funds for distribution to schools, colleges, and universities particularly affected by COVID-19 and its economic impact. A state’s portion will be based on its share of the national school-aged population (ages 5-24), and its share of Title I students. (H.R. 748, Sec. 18001(b).)

B. Primary and Secondary Schools Emergency Relief Fund

With regard to the $13.5 billion allocated for primary and secondary schools emergency relief grants, State educational agencies must submit applications to the U.S. Department of Education after the Department issues a notice inviting applications, which will be no later than April 26, 2020. Applications will be approved or denied within 30 days of their submission. (H.R. 748, Sec. 18003(a).) With an approved application, a State receives its allocation of the $13.5 billion in the same proportion that the State received funding under Title I of the ESEA in the most recent fiscal year. (H.R. 748, Sec. 18003(b).) States then allocate not less than 90% of the grant funds to issue subgrants to local educational agencies and charter schools. (H.R. 748, Sec. 18003(c).) Subgrants must also be made in proportion to the amount of funds each local educational agency and charter school received under Title I of the ESEA in the most recent fiscal year. (Id.)

Local education agencies receiving funds may use the funds to: (a) provide the activities authorized under the ESEA, (b) coordinate preparedness and response efforts of the local educational agency with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses to coronavirus, (c) provide principals and other school administrators with the resources necessary to address the needs of their individual schools, (d) address the unique needs of low-income children or students, children with disabilities, English language learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth; (e) training and professional development sanitation and minimizing the spread of infectious diseases; (f) purchasing educational technology; and (g) providing mental health service. (H.R. 748, Sec. 18003(d).)

C. Higher Education Emergency Relief Fund

With some limitations, institutions of higher education receiving funds from the Education Stabilization Fund “may use the funds to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus.” (H.R. 748, Sec. 18004(c).) However, such costs may not include payment to contractors for the provision of pre-enrollment recruitment activities, endowments, or capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship. (Id.)

Of the $14.3 billion that is earmarked for colleges and universities, approximately 90 percent ($12.558 billion) will be distributed directly to public colleges and universities based primarily on their share of full-time equivalent (FTE) enrollment. Specifically, of the 90 percent, 75 percent will be allotted based on the FTE enrollment of Federal Pell Grant recipients who are not exclusively enrolled in distance education courses prior to the coronavirus emergency and the remaining 25 percent will be allotted based on the share of FTE enrollment of students who are not Federal Pell Grant recipients who are not exclusively enrolled in distance education courses. (H.R. 748, Sec. 18004(a)(1).)

In addition to the 90 percent directly disbursed to public colleges and universities, another 7.5 percent ($1.047 billion) is designated for Historically Black Colleges and Universities and other institutions primarily serving students of color. (H.R. 748, Sec. 18004(a)(2).) The remaining 2.5 percent ($349 million) will be distributed by the Department of Education to institutions determined to “have the greatest unmet needs related to coronavirus” and the economic downturn, including lost revenue, reimbursement for expenses already incurred, technology costs associated with transitioning to distance education, faculty and staff trainings, and payroll. (H.R. 748, Sec. 18004(a)(3).) Additionally, the 2.5 percent may be used for grants to students for any component of the student’s cost of attendance, including food, housing, course materials, technology, health care, and childcare. (Id.) No less than 50 percent of the funds disbursed may be used to provide emergency financial aid grants to students for expenses related to the disruption of campus operations due to coronavirus (including eligible expenses under a student’s cost of attendance). (H.R. 748, Sec. 18004(c).)

Funds are to be distributed using the same system that the Department of Education uses when distributing funding to institutions of higher education under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

II. The COVID-19 Pandemic Education Relief Act of 2020

A. Federal Work Study Programs and Supplemental Educational Opportunity Grants

In addition to creating an “Education Stabilization Fund” to provide states with $30.75 billion to support K-12 and higher education systems, the CARES Act includes the “COVID-19 Pandemic Education Relief Act of 2020.” (H.R. 748, Sec. 3501 et seq.) The Education Relief Act allows institutions of higher education and local educational agencies relief from specific requirements associated with federal funding programs. For instances, under the “COVID-19 Pandemic Education Relief Act of 2020,” with limited exceptions, colleges and universities will not be required to provide a “non-Federal share” to receive the federal funding for federal work-study programs and supplemental educational opportunity grants for award years 2019-2020 and 2020-2021. (H.R. 748, Sec. 3503(a).)

Further, during the COVID-19 emergency, colleges and universities may continue paying work-study wages to affected students unable to fulfill their obligations under the program due to the public health emergency. (H.R. 748, Sec. 3505(a), (b).) Work-study payments may be made in an amount equal to or less than the amount of wages a student would have been paid as part of the program had the student been able to complete the work obligations necessary to receive work-study wages in that academic year. (Id. at (a)(1).) The payments may be made as a one-time grant or as multiple payments. (Id.) However, unless waived by the Secretary of Education, any payment made to affected work-study students will be subject to the matching requirements set forth in section 443 of the Higher Education Act of 1965 (20 U.S.C. 1087-53), unless waived by the Department of Education. (H.R. 748, Sec. 3505(a)(3).) No payment is allowed to a student who was either not eligible for work-study or who was not completing the work obligation necessary to receive the work-study program funds prior to the occurrence of the COVID-19 emergency. (Id. at (a)(2).)

Additionally, under the CARES Act, institutions of higher education have the authority to modify their use of funds allocated for specific federal programs providing financial assistance. Specifically, colleges and universities may reallocate the unexpended funds designated for federal work-study programs to supplemental educational opportunity grants. (H.R. 748 Sec. 3503(b); 20 U.S.C. § 1070b-3; 20 U.S.C. § 1087-52.) Unused funds for supplemental educational opportunity grants may then be reserved for one fiscal year for the purpose of awarding in that fiscal year “emergency financial aid grants to assist undergraduate or graduate students for unexpected expenses and unmet financial need” resulting from the public health emergency. (H.R. 748, Sec. 3504(a).) Emergency financial aid grants to students do not qualify as “other financial assistance” for the purpose of determining a student’s amount of need for financial assistance. (Id. at (c); 20 U.S.C. § 1087kk.) When determining eligibility for awards of emergency financial aid grants, colleges and universities may:

  1. Waive the amount of need calculation set forth in section 471 of the Higher Education Act of 1965 (20 U.S.C. § 1087kk);
  1. Allow a student affected by the COVID-19 emergency to receive funds in an amount that is not more than the maximum Federal Pell Grant for the applicable award year; and
  1. Utilize a contract with a scholarship-granting organization designated for the sole purpose of accepting applications from or disbursing funds to students enrolled in the college or university, if the scholarship-granting organization disburses the full allocated amount provided to the college to the recipients.

(H.R. 748, Sec. 3504(b).)

Further, any semester that a student was unable to complete because of the COVID-19 emergency will be excluded from the calculations of that student’s durational limits for subsidized loans and Pell Grant eligibility, to the extent practicable. (H.R. 748, Sec. 3506, 3507.) Additionally, the U.S. Department of Education may waive the amount that institutions and students would otherwise be required to return if the student withdraws from the institution as a result of the COVID-19 emergency. (H.R. 748, Sec. 3508(a)-(b).)

When determining whether a student is maintaining satisfactory progress, colleges and universities may excluded from the quantitative component of the calculation any attempted credits that were not completed by the student as a result of the COVID-19 emergency. (H.R. 748, Sec. 3509.)

Loan obligations may also be cancelled. Specifically, where a student has withdrawn from school as a result of the COVID-19 emergency, the borrower’s obligations to repay portions of a federal direct loan program will be cancelled. (H.R. 748, Sec. 3508(c).)

B. Waiver Requests

  1. Primary and Secondary Education

Excluding applicable civil rights laws, the U.S. Department of Education may waive statutory or regulatory requirements upon the request of the appropriate State or local educational agency. (H.R. 748, Sec. 3511.) The Secretary of Education must approve the waiver if she determines that such a waiver is necessary and appropriate in accordance with the law. (H.R. 748, Sec. 3511(b).) State educational agencies may request a waiver of statutory or regulatory requirements related to assessments, statewide accountability systems, and reporting requirements related to assessments and accountability. (H.R. 748, Sec. 3511(a).) States may also request a waiver of the requirement to identify new schools for comprehensive and targeted improvement, so long as any school with a school improvement designation for the 2019-2020 school year maintains that designation for 2020-2021. (Id.) States can also request waivers of other provisions. A full list of provisions that can be waived is available on this template from the Department of Education. (See also, U.S. Department of Education Press Release, New Funding Flexibilities to Support Continued Learning During COVID-19 National Emergency (April 6, 2020), here.)

State and local educational agencies may request a waiver from federal requirements pertaining to the 15% carryover limitation under Title I, content-specific spending requirements and justifications of the use of funds, professional development training limitations, and limits regarding Title IV-A funds that can be used for technology infrastructure. (H.R. 748, Sec. 3511(c).) Waiver requests must: (1) identify the Federal program(s) affected by the requested waiver, (2) describe the Federal statutory or regulatory requirements to be waived, (3) describe how the federal COVID-19 emergency prevented or otherwise restricted the ability to comply with the requirements, and (4) provide an assurance that the agency will work to mitigate any negative effects, if any, that may occur as a result of the requested waiver. (Id. at (c)(2).) If approved, the waiver generally is limited to one academic year. (Id. at (c)(4).) An educational agency, whether State or local, must provide the public with notice and opportunity to comment on the requested waiver. (Id. At (d)(1).)

Please anticipate changes regarding obligations under the Individuals with Disabilities Education Act (“IDEA”) (20 U.S.C. § 1401 et seq.) and the Rehabilitation Act of 1973 (29 U.S.C. § 701 et seq.). Within 30 days of enacting the CARES Act, the Department of Education will provide recommendations to specified Congressional committees regarding any additional waivers to the requirements of the IDEA and the Rehabilitation Act that the Department believes are necessary in order to provide limited flexibility to States and local education agencies to meet the unique needs of students with disabilities during the COVID-19 emergency, as determined by the Federal government.

  1. Minority-Serving Institutions of Higher Education

Unless enacted with Education Relief Act of 2020, the U.S. Department of Education may waive or modify statutory or regulatory provisions regarding reporting, use and distribution requirements for grant funding received by minority-serving institutions of higher education receiving assistance under title III, title V, or subpart 4 of part A of title VII of the Higher Education Act of 1965 (20 U.S.C. 1051 et seq.; 1101 et seq.; 1136a et seq.) at the time of a qualifying emergency. (H.R. 748, Sec. 3517(a).) Waivers may be requested for the eligibility data requirements set forth in 20 U.S.C. 1068(d) and 1103(e); the wait-out period set forth in the 20 U.S.C. 1059(d); allotment requirements under 20 U.S.C. 1059e(d)(4), 1059e(e), 1062(c)(2), and 1063. (Id. at (a)(1).) Further, any minority-serving institution of higher education receiving assistance under title III, title V, or subpart 18 4 of part A of title VII of such Act (20 U.S.C. 1051 19 et seq.; 1101 et seq.; 1136a et seq.) at the time of the federal COVID-19 emergency may request a waiver or modification of any statutory or regulatory provision that will ensure the institution is not adversely affected by any formula calculation for fiscal year 2020 and for the period beginning on the first day of the federal COVID-19 emergency and ending on September 30 of the fiscal year following the end of the national emergency, as necessary. (Id. at (a)(2).)

C. Workforce Response Activities

With regards to State and local workforce development programs under the Workforce Innovation and Opportunity Act (WIOA), funds available for statewide activities in the 2019 program year may be used for “rapid response activities” related to responding to COVID-19 national emergency. (H.R. 748, Sec. 3515(b).) Program administrative costs under section 128(b) and section 133(b) of the WIOA, the limit for administrative costs associated with carrying out local workforce investment activities has increased to 20% from ten percent (10%) if the portion of the total amount exceeding 10% is used to respond to the COVID-19 national emergency. (H.R. 748, Sec. 3515(a); 29 U.S.C. 3163(b)(4)(A).)

Individuals serving in a position that is eligible for an educational award under the National Service Trust and Provision of Education Awards offered as part the National and Community Service Act of 1990 (42 U.S.C. § 12501 et seq.), are allowed to accrue other service hours that will count towards the number of hours needed for that individual’s education award if, as a result of COVID-19, the individual is performing limited service or the position has been suspended or placed on hold. (H.R. 748, Sec. 3514.)

For more information regarding this article, please contact Rachel Napier at rnapier@ericksonlaw.com. For questions in general regarding this newsletter, please contact Kristina Limon at klimon@erickson.com.

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This publication was prepared solely for information purposes and should not be construed to be legal advice. If you would like further information on this matter, please contact our office.