Massive Federal Stimulus Bill Approved — Contains Funding and Waiver Authority for Educational Entities

03.27.2020

Earlier today, Congress provided final approval to H.R. 748, the Coronavirus Aid, Relief, and Economic Support (CARES) Act.  The Act was subsequently signed into law by the President.

The Act contains more than $2 Trillion in funding for individuals, businesses, and public entities.  This Alert focuses on those provisions of specific interest to California school districts, county offices of education, and community college districts.

Education Stabilization Fund (SEC. 18001 et seq.)

The Act establishes a $37.5 Billion “Education Stabilization Fund” consisting of the following:

  • Governors Emergency Relief Fund (Sec. 18002)

Governors may apply for and will receive 9.8% of the money – to be allocated to local educational agencies and institutions of higher education “most significantly impacted by coronavirus.”

  • Elementary and Secondary School Emergency Relief Fund (Sec. 18003)

State Educational Agencies may apply for and will receive 43.9% of the money, the vast majority of which (90%) must be allocated to LEAs (including charter schools), who can spend the money for a broad range of purposes.

A notice inviting grants will be issued within 30 days; and grant applications will be approved or denied within 30 days of receipt.

  • Higher Education Emergency Relief Fund (Sec. 18004)

Institutions of higher education will receive 46.3% of the money.  Of those funds:

90% will be used to “prevent, prepare for, and respond to coronavirus,” with 75% of that amount allocated based on full-time equivalent enrollment of Pell Grant recipients, and 25% of that amount allocated based on full-time equivalent enrollment of students not receiving Pell Grants.  These amounts will be calculated on the basis of students not enrolled exclusively in distance education.

7.5% will be allocated for grants, including grants under the Strengthening Institutions Program and to Hispanic-serving institutions, to be used “to address needs directly related to coronavirus . . ..”

2.5% will be allocated to institutions of higher education determined by the Secretary of Education to have the “greatest unmet needs related to coronavirus” to defray expenses and provide grants to students.

Although not entirely clear, one reading of the Act is that 50% of the overall funds to institutions of higher education must 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, including food, housing, course materials, technology, health care, and child care.  Remaining funds can be used for “any costs associated with significant changes to the delivery of instruction due to the coronavirus,” subject to certain exclusions.

  • Continued Payments to Employees/Contractors (Sec. 18006)

LEAs, the State, institutions of higher education, etc. who receive funding under the Education Stabilization Fund “shall to the greatest extent practicable, continue to pay its employees and contractors during the period of any disruptions or closures related to coronavirus.”  This language is similar, but not identical, to that in California Senate Bill (SB) 117, which states: “It is the intent of the Legislature that a local educational agency receiving a hold harmless apportionment pursuant to this section ensures that the local educational agency’s employees and contractors are compensated and paid during the period of time a school is closed due to the coronavirus (COVID-19), as reasonably anticipated if the school has not been closed due to COVID-19.”  As we advised in connection with SB 117: LEAs utilize a variety of contractors and employees (including temps and subs) providing a wide range of services.  Each employment situation or contract should be considered on a case-by-case basis and reviewed with legal counsel to determine whether and what payment should be made.

Educational Waivers (SEC. 3511, 3517)

The Act contains National Emergency Education Waivers (Sec. 3511) (K-12) and Waiver Authority and Reporting Requirement[s] for Institutional Aid (Sec. 3517) (Higher Ed).  These provisions authorize broad waivers and contemplate further waivers of the Elementary and Secondary Education Act of 1965; contemplates further waivers of the IDEA (and other statutes); authorizes narrower waivers of the Higher Education Act of 1965; and loosens restrictions on some existing higher education grant funding as follows:

  • Elementary and Secondary Education Act of 1965

States may request waiver of certain federal requirements under the Elementary and Secondary Education Act of 1965, pertaining to academic assessment; statewide accountability systems; targeted support for low-performing schools or student subgroups; rules governing collection and reporting of certain data relevant to State Report Cards and/or LEA Report Cards; and rules governing reversion of federal funds allocated on a “use it or lose it” basis.

State educational agencies and local educational agencies (including charter schools) may request waiver of certain federal requirements under the Elementary and Secondary Education Act of 1965, pertaining to: (1) Portions of Title I, including Title I requirements pertaining to “maintenance of effort,” and limits on carryover and waiver of Title I funds allocated but not expended in a fiscal year; (2) Certain requirements for “Student Support and Academic Enrichment Grants,” including the obligation to conduct a “comprehensive needs assessment,” and the obligation to direct grant funding to specified purposes; and (3) Requirements for “professional development.”

Mitigation:  State educational agencies and LEAs receiving waivers must “work to mitigate any negative effects . . . .”

Waivers limited to 2019-20:  Waivers are limited to the 2019-2020 academic year “except to carry out full implementation of any maintenance of effort waivers granted during the 2019-2020 academic year.”

Additional K-12 Waivers Contemplated:  Within 30 days, the Secretary of Education is required to submit a report “with recommendations on any additional waivers” under various laws including the Elementary and Secondary Education Act of 1965 and the Carl D. Perkins Career and Technical Education Act of 2006.  Any such additional waivers would become effective only if enacted into law.  For further discussion about the impact on special education and Section 504, please see our Firm’s separate Alert regarding today’s historic legislation.

  • Higher Education Act of 1965

Institutions of Higher Education may request waiver of certain federal requirements pertaining to grants under the Higher Education Act of 1965, specifically eligibility data requirements for grants to Hispanic-serving institutions, or those receiving institutional aid under the Strengthening Institutions Program.  The Act additionally waives the “wait-out” period applicable to renewed grants.

Modification Of Existing Higher Education Grant Requirements:  The Secretary of Education is given broad authority as a result of a “qualifying emergency” (defined as the current coronavirus emergency), for the period beginning on the first day of the emergency and running through September 30 of the fiscal year following the end of the emergency, to take the following actions:

“Modify the required and allowable uses of funds for grants” under specified portions of Title III, Title IV, and Title VII of the Higher Education Act of 1965, at the request of the grant recipient (including institutions of higher education).

Modify any Federal share or other financial matching requirements under specified portions of Title III and Title VII of the Higher Education Act of 1965

Emergency Relief for Unemployment (SEC. 2103, 2104)

The Act allocates to each State funds intended to reimburse one half of the amount governmental entities paid/will pay into unemployment insurance between March 13, 2020 and December 31, 2020.

Also of interest to public sector employers and employees, individuals on unemployment will, in addition to any unemployment benefits received under state law, receive an additional $600 in federal money per week through July 31, 2020.

Clarification of New Paid Leave Rules (SEC. 3601 et seq.)

The Act clarifies rules on paid leaves approved in HR 6201, which apply to California public employers.

  • Emergency Family and Medical Leave Expansion Act

Maximum employer payment per employee:  HR 6201 expands FMLA by providing for up to 12 workweeks of paid leave for childcare purposes where the regular childcare is closed or unavailable because of the COVID-19 pandemic. Eligible employees are entitled to two-thirds (2/3) pay up to $200 per day/$10,000 aggregate for up to 10 weeks of leave (the first two workweeks are unpaid unless other paid leave is substituted).  Section 3601 of the stimulus bill clarifies that the employer maximum obligation of $200 per day and $10,000 aggregate for each employee applies to leave taken under the expanded FMLA provision.

Eligibility if previously laid off:  HR 6201 requires that an employee have been employed by the employer for at least 30 calendar days in order to be eligible for the extended FMLA for childcare.  Section 3605 of the stimulus bill adds that a previously laid off, then rehired employee can be eligible if the employee was: (1) Laid off not earlier than March 1, 2020; (2) Worked not less than 30 of the last 60 calendar days prior to the layoff; and (3) Rehired by the employer.

  • Emergency Paid Sick Leave Act

Under HR 6201, a full-time employee is entitled to 80 hours of paid sick leave (pro-rated for part-time employees) for six reasons related to the COVID-19 pandemic.  Section 3602 of the law clarifies that the employer obligation  is limited to $511 per day/$5,110 aggregate for an employee subject to quarantine or isolation or who is experiencing COVID-19 symptoms and seeking diagnosis, or $200 per day/$2,000 aggregate to an employee caring for others who are under a quarantine or isolation order or who are advised to self-quarantine, or where an employee must care for his/her child because of school or childcare closure or unavailability due to COVID-19 concerns.

Financial Aid Requirements for Institutions of Higher Education (SEC. 3503-3510, 3513)

The Act addresses a number of specific financial aid requirements for institutions of higher education and their students, including:

  • Campus Based Waivers (Sec. 3503): The Act provides a waiver of requirements for higher education institutions to match federal funds for Federal Supplemental Educational Opportunity Grants and Federal Work-Study Programs for the 2019-2020 and 2020-2021 academic years.  The Act also authorizes higher education institutions to reallocate up to 100 percent of its unexpended Federal Work-Study Program funds to Federal Supplemental Educational Opportunity Grants under qualifying emergencies. Institutions may not, however, reallocate Federal Supplemental Educational Opportunity Grant funds to Federal Work-Study Programs.
  • Reallocation of Federal Supplemental Educational Opportunity Grant Funds (Sec. 3504): Higher education institutions are authorized to reserve any amount of Federal Supplemental Educational Opportunity Grant funds, and reallocate the funds as emergency financial aid grants to assist undergraduate or graduate students for unexpected expenses and unmet financial needs resulting from a qualified emergency. The Act permits institutions to waive otherwise applicable requirements regarding calculation of need, and to make awards up to the maximum Pell Grant amount for the applicable award year.
  • Federal Work-Study Payments (Sec. 3505): The Act authorizes payments of Federal Work-Study funds to students unable to fulfill their work-study obligations during a qualified emergency (not to exceed one academic year). Affected students must have been eligible to receive Federal Work-Study and earned Federal Work Study wages for this academic year prior to the qualifying emergency.
  • Adjustment of Subsidized Loan Usage Limits (Sec. 3506): Authorizes the Secretary of Education to exclude, from time limits on the period during which a student is eligible to receive federal direct loans, a semester (or equivalent) that a student does not complete as a result of a qualifying emergency.
  • Exclusion from Federal Pell Grant Duration Limit (Sec. 3507): Authorizes the Secretary of Education to exclude, from the Pell Grant 12-semester eligibility limit, any semester or semester equivalent that a student was unable to complete due to a qualifying emergency.
  • Institutional Refunds and Federal Student Loan Flexibility (Sec. 3508): Mandates the Secretary of Education waive requirements that institutions refund any loan or grant amounts for payment or enrollment periods when a student withdrew from the institution as a result of a qualifying emergency. It further requires that the Secretary waive the requirement that students return Pell Grant and other grant funds if the student withdraws from an institution due to a qualifying emergency. The Act also cancels a student’s obligation to repay the portion of a Federal Direct Loan for which the student withdrew due to a qualifying emergency. The Act gives increased flexibility to institutions to grant student leaves of absence as a result of a qualifying emergency. The Act requires institutions report the number of students withdrawing enrollment, the amount of grant or loan assistance provided for each student and the total amount of assistance the institution will not return under this waiver.
  • Satisfactory Progress - Financial Aid Eligibility (Sec. 3509): For the purposes of financial aid eligibly, higher education institutions may exclude from the student’s GPA calculation any course that was not completed due to a qualifying emergency.
  • Study Abroad (Sec. 3510): Authorizes distance education for study abroad programs when the foreign institution is located in a country affected by a public health emergency, major disaster or national emergency. During a qualifying emergency, the Secretary of Education may allow foreign institutions to contract with higher education institution in the United States, for the purpose of allowing students to use financial aid to complete courses. The Act requires institutions to report any such use of financial aid.
  • Temporary Relief for Federal Student Loan Borrowers (Sec. 3513): Mandates the Secretary of Education to suspend all Federal Direct Loan and Federal Family Education Loans held by the Department of Education payments through September 30, 2020 and the accrued interest during that time. For purposes of loan forgiveness programs and loan rehabilitation programs, the suspended payments will count towards qualifying payment requirements.

Additional Provisions of Interest

  • Supplemental Awards for Health Centers (Sec. 3211): Amends the Public Health Service Act by providing supplemental funding during the 2020 fiscal year for the prevention, diagnosis, and treatment of COVID-19, only for programs of the Public Health Service Act (42 U.S.C. 254 through 256), potentially including institutions of higher education operating a health center that serves “a population that is medically underserved, or a special medically underserved population comprised of migratory and seasonal agricultural workers, the homeless, and residents of public housing,” or a nurse managed health clinic, defined as a program that “provides primary care or wellness services to underserved or vulnerable populations and that is associated with a school, college, university or department of nursing, federally qualified health center, or independent nonprofit health or social services agency as defined by the Public Health Service Act.”
  • Education and Training Relating to Geriatrics (Sec. 3403): Creates a $40 million annual pool of money for fiscal years 2021-2025 for, among others, community college and college/university nursing programs to train individuals in geriatric medicine.  Grants shall not be less than $75k per year.
  • Nursing Workforce Development (Sec. 3404): Revives federal funding for a program under the Public Health Service Act to promote educational programs for persons entering the nurse workforce, making a $117 million annual pool available for grants.
  • Extension Of Demonstration Projects To Address Health Professions Workforce Needs (Sec. 3823): Extends the use of funding from 2019 and prior, if any, to continue promoting jobs in healthcare professions education through November 2020.
  • Provisions Related to the Corporation for National and Community Service (Sec. 3514): Provides relief for students and other individuals working towards an education award in a National Service Trust-funded program such as AmeriCorps, Learn and Serve America, Senior Corps, and other national service initiatives.  If a position was suspended or had its services limited due to the COVID-19 pandemic, the individual serving in such a position will be allowed to accrue other service hours that will count toward the hours needed for the education award.  If an individual was required to exit the position early, the individual may be deemed as having met the requirements of the position and be awarded the full value of the educational award under the individual’s participating program.
  • Provisions Related to the Workforce Innovation Opportunity Act (Sec. 3515): Amends the Workforce Innovation Opportunity Act to generally increase the funds available to the states to address layoffs as a result of the COVID-19 pandemic.  Other than technical accounting modifications, the Act allows for unobligated 2019 funds under the Act to be rolled over for use in providing job training and education to those recently laid off as a result of massive business closures in response to the pandemic.  LEAs and community colleges should assess how their current programs may be using Workforce Innovation Opportunity Act grants to determine whether additional grants from Sacramento may soon become available.
  • Expansion of Telehealth Services (Sec. 3701-3707): Expands telehealth services, allowing more patients to be seen by doctors without need for an in-person visit.  These provisions may make it easier for employees to receive medical advice, and a doctor’s note, in the current environment.
  • Service Obligations For Teachers (Sec. 3519): Authorizes the Secretary of Education to modify the criteria for excusing TEACH Grant recipients from fulfilling their service obligation, and requires the Secretary of Education to waive the requirement that their years of teaching service be consecutive, subject to specified requirements.
  • Safe School and Citizenship Education Fund (Sec. 18008): Makes available $100 million (as a supplement to existing Project SERV funding) to help elementary, secondary and postsecondary schools clean and disinfect affected schools, and assist in counseling and distance learning and associated costs.

Special thanks to attorneys Tina Kannarr, Joyce Yu, Rebecca Delatorre, Mellissa Gallegos, Stephanie Crespin, and Ashlee Reece, who contributed to the preparation of this Alert.

These AALRR publications are intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

©2020 Atkinson, Andelson, Loya, Ruud & Romo

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