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CACUBO Webinar Series on:HEERF UpdateFebruary 17, 2022We will begin shortly. Thanks for joining!0

This is the 18th monthly webinar CACUBO has hosted since the pandemicbegan. The webinars have been an effort to stay engaged with ourmembers during the pandemic. Today, we will hear from panelists who will provide us an update on theaccounting for and processing of Higher Education Emergency Relief Fund(HEERF), specifically discussing the processing of the No-Cost Extension,the Annual Reporting Requirements and a discussion of lessons learned. This webinar is eligible for CPE. If you are interested in receiving CPEcredit for this webinar, please e-mail me (Marty Mickey) [email protected] now. During the webinar, there will be three check inquestions for you to answer. In order to receive CPE, you must answer allthree of these questions. We will send out a survey afterwards to solicit thoughts and topics forfuture webinars. If you would be willing to present in a future webinar, pleasee-mail me [email protected]

DISCLAIMERThe interpretations and thoughts contained herein are those of thespeakers presenting and are subject to change and may or may not beappropriate for your institution. Consultation should be held withyour own CPA firm to validate the position you are taking in a certainarea.QUESTIONSWe have a lot of material to cover and will try to get to questions atthe end. Please refrain from entering questions initially as we maycover the topic you have a question on in the presentation. For thosequestions we don’t get to, we will try to provide a written follow uplater.QUESTIONSWe will make copies of these slides and a recording of the webinaravailable on the CACUBO website in a few days.2

Today’s PresentersSpeakers Adam Smith, BKD Vicki VanDenBerg, Plante Moran Lois Tatro, Wichita State University Marty Mickey, National Louis University3

Agenda Additional HEERF Funding Practices to monitor and suppresscoronavirus Conduct direct outreach tofinancial aid applicants Additional uses of institutionalfunds for student needs No-cost extensions Common Issues, Questions &Findings: Capital expenditures Technology costs Procurement concerns HEERF ReportingRequirements Indirect cost rate – what’sallowable? Revenue recognition4

Additional HEERF Funding(SSARP)Supplemental Support Under the American RescuePlan (SSARP)Applications due April 4, 2022 198 million available for allocation to institutions who meet one ormore of the following criteria (priorities): Underfunded grantees due to technical errors, application issues or notreporting in IPEDSMIS or SIP grantees that were underfunded due to technical errors orapplications issues, are newly eligible or a branch campusUnderfunded ARP grantees due to an institutional merger or change in PPACommunity colleges and rural IHE’s serving a high percentage of low-incomestudents and experiencing enrollment declines First priority – Community Colleges Second priority – Other public & private nonprofit IHE’s in a rural settingInstitutions serving high percentages of graduate students5

American Rescue Plan, 2021Application Deadline Extension Applications deadline has been extended to March 7, 2022Reopening of application deadline to accommodateinstitutions that may have missed out on some of the HEERFfundingEligibility Public and private institutions that received HEERF IHE’s that meet Criteria as a Strengthening Institutions Program Minority Serving Institutions Program Proprietary Institution Grants Funds for Studentsprogram Even those that were not eligible for CRRSAA6

First Polling QuestionIs your institution planning on applying foradditional HEERF related funding?1.2.3.YesNoUnsure7

Practices to monitor andsuppress coronavirus Covid-19 mitigation - According to a recent survey ofcollege presidents conducted by the American Council onEducation, nearly 90 percent of institutions used HEERF: to purchase COVID-19 tests conduct health screening meet other urgent health needs. implementing testing and contact tracing purchasing PPE, HVAC, and other ventilation system improvementsto prevent the spread of COVID-19 providing vaccine clinics and incentives8

Conduct direct outreach tofinancial aid applicantsDirect outreach could include, but is not limited to, any of thefollowing: Email to students who receive financial aid, Mail to students who receive financial aid, Phone or voice communication, Webinar invitations, and In-person interviews or meetings To date, these have not amounted to significant costs You have to include something on reports9

Additional FAQ on institutionalfunds for student basic needs FAQ’s released 1/20/22 Examples of uses of institutional funds for student needs:ChildcareFood – meal vouchers, food pantriesTransportation costs including public transportation, freeand discounted parking Academic – textbook voucher program, tutoring, mentorprograms, additional access to technology Housing – rent support, scholarships Mental health and health care - student support centers,telehealth services Partnering with other sources to promote advocacy andoutreach services, Open educational Resources (OER)expansion 10

No Cost Extensions Must be submitted no more than 60 days and no later than 30days before the grant award period ends Example – award period is 5/14/2020-5/21/2022 NCE must be submitted between 3/22/22-4/21/22 Extension requestion must include the following: Justification Narrative (see next slide) The revised expiration date (which can be for up to oneyear after your original expiration date) The expected budget amount that will look to carry over tothe NCE timeframe A budget breakdown of said spending given the amountremaining (include a small/brief narrative to each lineitem or expenditure). Include your PR# from your GAN in the email subject line11

No Cost Extensions –Justification NarrativeMust include the following items: Explain why you were not able to complete the grant –setbacks and how you plan to address your goals, objectivesand the priority of your submission. Include potential emergency student aid awards Institutional issues that are outstanding related to theCOVID-19 impact. Identify and include the current Emergency Relief e/arpfaq.pdf)connected to expense related issues How the expenses will be factored and addressed during theNCE time-period and of the review request. Details on the extenuating/uncontrollable circumstance thatprevented you from completing such actions/goals duringyour current budget/performance period12 Additional justification of need for the extension.

No Cost Extensions – Strategy Work with your HEERF program manager orthe OPE Emergency Response Unit Identify uses of funds – will get approval forexpenses and student grants (probably not forlost revenue based on justification guidance) Plan ahead!13

Second Polling QuestionAre you planning on applying for aNo Cost Extension?1.2.3.YesNoUnsure14

Common Issues, Questions &Findings Capital expenditures – what’s allowable? Technology costs – what’s allowable? Procurement concerns HEERF Reporting Indirect cost rate – what’s allowable? Revenue recognition15

Capital expenditures – what’sallowable? Items specifically excluded: Permanent building construction(no new facilities) Structural alterations to buildings(it can be completely changing an existing building) Building maintenance and repairs(it can’t already be broken) “Minor Remodeling” is acceptable Installation or renovation of an HVAC system, to help withair filtration to prevent the spread of COVID-19 The purchase or leasing of temporary trailer classroom unitsto increase social distancing The purchase or costs of the installation of “room dividers”within a previously completed building to increase socialdistancing16

Capital expenditures – what’sallowable? Are partial reimbursements for HVAC replacements allowable? Would the purchase of security cameras or exterior locks be allowed? Yes, a project can be under consideration pre-pandemic and be acceptable as it may be additionallynecessary as a direct result of COVID-19. However, a project that was planned and approved prior toMarch 13, 2020, would not appear to meet the threshold for an expenditure caused by the coronavirus.Are replacing seats in classrooms from a permanent location to be portable toaccommodate social distance acceptable expenses? Potentially, if directly associated with vaccination efforts (FAQ #28) and/or setting up a testing siteDoes it matter if a project was planned pre-pandemic? Maybe, a specific purpose associated with the coronavirus must be able to be articulatedWould new signage that is permanent qualify if purchased for vaccine clinics that areconducted on campus? Yes, would appear to be allowable under FAQ #24Yes, would appear to be allowable as analogous to “installation of room dividers within a previouslycompleted building to increase social distancing” under FAQ #24What does “redesigning food service facilities” entail? (FAQ #28) There is not an authoritative “list” of allowable expenses, however, costs incurred should follow theprinciples of being directly related to the coronavirus. Designing and replacing food service equipment tocreate additional social distancing would likely be acceptable. Cosmetic changes or upgrades to facilitieswhich do not improve the campus COVID-19 response would likely not be acceptable.17

Capital expenditures – what’sallowable? Many of our lecture halls have swivel seats that are embedded in concrete. Theseseats are not well suited to social distancing. Is it a minor remodeling to remove thoseseats and replace them with completely moveable seating options? The College would like to reconfigure desks at center buildings. Students, faculty, staffand visitors enter these complexes on a daily basis. Currently, the desks areinadequately positioned and constructed to provide protection against airbornecontagions. The request is to move the desks to the center of the entrancewaycausing those entering the building to enter on one side of the desk and those thatexit on the other side of the desk to promote social distancing. Additionally, therequest is to elevate the desk and place a glass partition around the structure toprovide a barrier against the transmission of COVID-19. DoE FAQ's indicate the "purchase or costs of the installation of "room dividers" withina previously completed building to increase social distancing" are "permissible minorremodeling". It appears likely that replacing fixed seating with other seating toenhance social distancing would likely be an analogous and acceptable expense(although not explicitly listed as an example of minor remodeling)(FAQ #24) However, as with all expenditures, the institution should consider if theexpenditure had been determined necessary prior to COVID-19 (or in this instanceswas not functioning as intended), which could be indicative of an item which is not"expenses associated with the coronavirus". (FAQ #21)18

Technology costs – what’sallowable? Are ERP/IT System Infrastructure upgrades acceptable? It depends. If the upgrades can directly be correlated with needs as aresult of the coronavirus and providing instruction to students, then likelyyes. If the project was already planned and underway prior to March 13,2020, then likely no ERP Upgrade: We are upgrading our current ERP to another cloud based SAASproduct with the same vendor. This comes with a large implementation fee.This cloud based software will allow our faculty and staff to operate remotelyand serve students from wherever they are. We were unable to perform all ofour functions remotely due to the limitations of our current software. Wouldthis be allowable? Also, could an initial multiyear subscription be allowable? HEERF FAQ's issued October 2, 2020 (FAQ #10) indicates that "aninstitution may use funds from the Institutional Portion of its section18004(a)(1) allocation to purchase equipment or software, pay for onlinelicensing fees .associated with a significant change in the delivery ofinstruction due to the coronavirus. An institution may also useInstitutional Portion funds for any other costs for computer systemupgrades that are reasonably related to 'significant changes to thedelivery of instruction due to the coronavirus'. This would not include,for example, previously planned upgrades to computer systems.19

Technology costs – what’sallowable? DoE is leaving opportunity for IT related expenses to becharged to the grant. It would appear that DoE is emphasizing that anycomputer/ERP infrastructure items need to be directlycorrelated with the coronavirus and not representative ofupgrades (or repairs) that were going to be needed in thenormal course of business. For example, if your institution’s IT plan indicates thatupgrades to switches or servers were needed prior to thepandemic, it potentially becomes difficult to document thatthe pandemic caused the need for the expenditure. It couldbe possible that while certain upgrades were alreadyneeded, the pandemic caused an additional incrementalcost to cover some level of additional service or functionalitythat was not necessary prior to the pandemic.20

Technology costs – what’sallowable? We are discussing computer equipment upgrades such as switches, switch gear, adomain controller, VSANs, servers, and additional antivirus/firewall software, aswell as temp contracted staff to install, to allow for improved security andperformance to serve students and employees from remote locations.Upgrading 25 year old Fiber Optic Cable, data switches and wireless networking HEERF FAQ's issued October 2, 2020 (FAQ #10) indicates that "an institutionmay use funds from the Institutional Portion of its section 18004(a)(1)allocation to purchase equipment or software, pay for online licensingfees .associated with a significant change in the delivery of instruction dueto the coronavirus. An institution may also use Institutional Portion funds forany other costs for computer system upgrades that are reasonably related to'significant changes to the delivery of instruction due to the coronavirus'.This would not include, for example, previously planned upgrades tocomputer systems. Therefore, while DoE is leaving opportunity for IT related expenses to becharged to the grant, it would appear that DoE is emphasizing that anycomputer/ERP infrastructure items need to be directly correlated with thecoronavirus and not representative of upgrades (or repairs) that were goingto be needed in the normal course of business. As an example, if yourinstitution’s IT plan indicates that upgrades to switches or servers wereneeded prior to the pandemic, it potentially becomes difficult to documentthat the pandemic caused the need for the expenditure. It could be possiblethat while certain upgrades were already needed, the pandemic caused anadditional incremental cost to cover some level of additional service orfunctionality that was not necessary prior to the pandemic.21

Third Polling QuestionWhat has your institution spent the majorityof its HEERF institutional funds on?1.Technology UpgradesCapital Expenditures3. Forgiveness of Student Receivables4. Student Health/Vaccines2.5.Lost Revenue22

ProcurementThe procurement standards included in Subpart D, Section 200.317–200.327, ofthe Uniform Guidance apply to procurement of goods and services directlycharged to a federal award; the standards don’t apply to indirect costs orpayroll.General procurement standards (§200.318 and §200.319), key items that mustbe followed include: Competition – A nonfederal entity must provide for full and opencompetition in procuring goods and services. This means situations mustbe avoided that may prevent competition, such as placing unreasonablerequirements on firms to qualify noncompetitive pricing practices betweenfirms or affiliated companies or specifying only a “brand name.” Documented policies – Nonfederal entities must document procurementprocedures and policies. If procedures aren’t currently documented,nonfederal entities must make this a priority. If policies already aredocumented, entities should review those policies and ensure theyincorporate and follow applicable regulations. These procedures mustensure all solicitations clearly and accurately describe the requirements ofthe goods or services to be procured and identify all requirements thatbidders must fulfill and the factors used in evaluating bids. In addition, ifpolicies include a prequalified list of persons, firms, or products used in23procuring goods and services, the list should be current and includeenough qualified sources for open competition.

Procurement Under the general procurement standards (§200.318 and§200.319), key items that must be followed include: Oversight – A nonfederal entity must monitor contractors toensure they perform in accordance with the terms, conditions,and specifications of their contracts or purchase orders. Thisrequirement supplements a similar requirement in whichcontracts only are awarded to those that use funds responsiblyand in accordance with the agreement’s terms. Conflicts of interest – A nonfederal entity must have writtenpolicies about conduct of its employees involved in theselection, award, and administration of contracts. Thesepolicies must cover both organizational and personal conflict ofinterest to prevent unfair or noncompetitive awards beingprovided. These policies also must include disciplinary actionsfor any violations of the conflict-of-interest standards. Recordkeeping – A nonfederal entity must maintaindocumentation to support the history of the procurement, i.e.,rationalization for method used, contractor selection orrejection, basis for contract price, etc.24

Procurement - Micropurchases For purchases in which the aggregate dollar amountdoesn’t exceed the micropurchase threshold—currently 10,000. Purchases may be made without cost or priceanalysis or soliciting any quotes or bids if thenonfederal entity considers the price to bereasonable based on research, experience, purchasehistory, or other information and documents it filesaccordingly. In the 2020 revised Uniform Guidance, §200.320allows nonfederal entities to increase theirmicropurchase threshold if certain criteria are metand must be authorized or not prohibited understate, local, or tribal laws or regulations.25

Procurement – Small Purchases This method is for purchases above the micropurchasethreshold but below the simplified acquisition threshold(SAT) as defined by the FAR—currently 250,000,adjusted periodically for inflation Price or rate quotations must be obtained from anadequate number of qualified sources as determinedappropriate by the nonfederal entity. This doesn’t meanformal bids and solicitations for quotes must be made.Quotes may be obtained from a variety of simplesources, e.g., internet search, vendor price listing, verbalquotes, etc. Similar to the micropurchase method, nocost or price analysis is required. A nonfederal entity may compare pricing based on aninternet search between a local supply store versus anational chain and select a vendor based on thesequotes.26

HEERF II and III Reporting Quarterly Reports ED confirms that institutions will be required to postthe Quarterly Institutional Public Reporting Form (which wasupdated on May 11, 2021) and the Quarterly Student PublicReporting Form (updated May 13, 2021) for HEERF II and HEERFIII funds to their websites by the tenth day following the end ofeach calendar quarter, as has been that case for HEERF I funds Can quarterly reports be cumulative across multiple HEERFfunds? That is, can one quarterly report be posted that includescumulative HEERF I, II, and III funds in the same report? Quarterly reports are assumed to merge within a singlereport an institution's expenditures across the differentstrands of HEERF grant funds (HEERF I, II, and III) unless aninstitution's reporting explicitly designates a Quarterlyreport as only pertaining to a specific set of HEERF funds(e.g., posting a separate Quarterly report for ARP funds).However, each report should be distinct in that each reportcovers those expenditures under the specific quarterly27timeframe.

HEERF Reporting – Annual Reports HEERF II and HEERF III funds will also be subject to the annualreporting requirement (also detailed for HEERF I above), which isnext due in early 2022 HEERF III funds, in order to be prepared for next year's annualreport. ED advises institutions to "carefully document how theyprioritize students with exceptional need in distributingemergency financial aid grants to students, as the Department isexploring reporting requirements regarding the distribution ofemergency financial aid grants to students.“ ED also indicates that it is exploring collecting more informationon the HEERF annual report on institutions' implementation oftwo new required activities Congress added to the AmericanRescue Plan: implementing evidence-based practices to monitorand suppress the coronavirus, and conducting direct professionaljudgment (PJ) outreach to financial aid applicants.28

Indirect cost rate – allowable? For what items is it permissible/appropriate to add ourindirect rate when submitting for expense reimbursementor lost revenue? DoE has not provided a complete listing of permissibleuses for applying an indirect cost rate, however, hasapplied the following principle based and direct guidance: 1) Indirect costs may only be applied to InstitutionalPortion awards (FAQ #43) 2) Indirect costs may NOT be charged to any studentgrant awards (FAQ #43) 3) Lost revenues should not apply an indirect cost rate 4) Institutions should carefully consider that where anindirect cost rate is applied, costs should beconsistently charged as "indirect" or "direct" and maynot be "double-charged".29

Revenue RecognitionFASB Institutions All HEERF program grants have minimum spendingrequirements on emergency aid to studentsPer ASU 2018-08, grants are conditional when both a “rightof return” (or right of release) and a “barrier to entitlement”existRight of return: Because the grant falls under UGrequirements, there is a right of return under OMB’sumbrella of rules.Limited Discretion: Department of Education use rules limitthe university’s discretion over how funds can be spent. Thestudent portion of all HEERF grants must be spent onproviding emergency aid to qualifying students with themost need. For the institutional portion, spending discretionis limited by exclusion and use rules: expenses [including lostrevenue] associated with an operating environment that hasbeen affected by the coronavirus pandemic.30

Revenue RecognitionFASB Institutions (continued) At risk considerations: This barrier affects the timing ofrevenue recognition. All HEERF program grants haveminimum spending requirements on the studentportion.HEERF III require that at least 50% of funds be used foremergency grants to studentsIn other words, the proportion of revenue recognizedunder Part B for all HEERF program grants should notexceed the proportion of revenue recognized under PartA.To recognize more revenue under Part B places therevenue associated with the incremental spending atrisk until a similar proportion of Part A spending hasoccurred.31

Revenue RecognitionFASB Institutions (continued) HEERF III – 50% minimum spending requirement onemergency aid to students. Example: An institution has a 2 million allocation, has a June30 year end, draws 700 thousand (K) from G5 on April15, and disburses to students as aid. The institution draws 900K Part B funds from G5 onApril 20 and assigns to lost tuition revenue. On June 30, 2021, the institutions would recognize 700K in Part A revenue, 700K in Part B revenue, and 200K unearned revenue.32

Revenue Recognition –GASB Institutions Under Statement No. 33, the HEERF grant is considereda voluntary nonexchange transactions (a legislativeagreement, such as a grant, entered into willingly by theparties to the agreement, that is other than anexchange transaction). Revenue can be recognizedwhen all applicable eligibility requirements are met. Student portion eligibility requirements: Institutionsmust select students with the greatest need to receiveHEERF emergency aid grants. These selection criteria(and ensuring the exclusion of non-resident and DACAstudents) are eligibility requirements. Once students areselected and aid is disbursed, grant revenue can berecognized as funds are provided to students. Grantfunds drawn before student selection and disbursementwould be classified as unearned revenue33

Revenue Recognition –GASB Institutions (continued) Institutional portion eligibility requirements: Revenueon institutional funds (Part B) can be recognized asminimum required spending on emergency aid grants tostudents (Part A) occurs. Meeting the minimum studentaid disbursement criteria is an eligibility criteriarequirement – specifically a contingency (criteria d) inparagraph 20 of Statement No. 33 – for institutionalfunds revenue recognition. Until student funds are used,any institutional funds drawn and applied to eligibleuses would be unearned revenue. This is consistent withparagraph 15 of Statement No. 33 in that revenue isunearned by recipients until allowable costs have beenincurred and any other eligibility requirements havebeen met.34

Revenue Recognition –GASB Institutions (continued) HEERF III – 50% minimum spending requirement onemergency aid to students. Example: An institution has a 2 million allocation, has a June30 year end, draws 700 thousand (K) from G5 onApril 15, and disburses to students as aid. The institution draws 900K Part B funds from G5 onApril 20 and assigns to lost tuition revenue. On June 30, 2021, the institutions would recognize 700K in Part A revenue, 700K in Part B revenue,and 200 K unearned revenue.35

Feb 17, 2022 · future webinars. If you would be willing to present in a future webinar, please e-mail me a