Updated Higher Education Emergency Relief Fund Guidance (HEERF II)

David DiIulis CPA

David A. DiIulis, CPA, MBA

7 April 2021

The Higher Education Emergency Relief Fund II (HEERF II), authorized by the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020 and made available $22.7 billion for Institutions of Higher Education. Since the law was enacted in December, there have been many questions by institutions relating to how the funds may be spent.  Additionally, the Act stipulated that costs had to be incurred on or before December 27, 2020.

The CRRSAA provided the following allowable uses for funds made through that appropriation:

  • Defray expenses associated with coronavirus, including lost revenue, reimbursement of expenses already incurred, technology costs associated
    with a transition to distance education, faculty and staff trainings and payroll;
  • Carry out student support activities authorized by the Higher Education Act of 1965, as amended, that address needs related to coronavirus;
  • Provide financial aid grants to students;
  • Extend the allowable use provisions to any of the Institution’s unspent CARES act funds.

On March 19, 2021, the Department of Education issued more comprehensive guidance and increased flexibility regarding the use of funds received under the HEERF grant programs. One of the more significant changes related to the timing of incurred expenses. The original guidance only allowed the funds to be used for expenses incurred on or after December 27, 2020. Grantees will now have the
flexibility to charge costs back to March 13, 2020, the original date of declaration of the national emergency.

This new guidance also included a new set of thirteen frequently asked questions (FAQ) relating to how institutions may calculate and account for lost revenues that may have been lost due to COVID-19. The guidance defined lost revenue as those revenues that would otherwise have been expected but were reduced or eliminated as a result of the pandemic. It also mentions the fact that those revenues can only be estimated. It discusses those potential sources of revenues that are reimbursable under the HEERF grant programs related to academic sources may include, but, are not limited to the following:

  • Tuition, fees and institutional charges (including unpaid student accounts receivable);
  • room and board;
  • enrollment declines;
  • supported research;
  • summer terms and camps.

It also identifies those sources of reimbursable revenues related to auxiliary services sources such as:

  • Canceled ancillary events;
  • disruption of food service;
  • dormitory services;
  • childcare services;
  • use of facilities or venues;
  • bookstore revenue;
  • parking revenue;
  • lease revenue;
  • royalties; and other operating revenues.

Other key FAQ topics discuss what revenues specifically are not allowable under the HEERF grant programs. They were defined as capital outlays associated with facilities related to athletics, acquisition of real property, contributions or donations to the institution, marketing or recruitment activities, alcohol sales, investment income and revenue related to sectarian instruction or religious worship.

The guidance stipulates that only lost revenue associated with the pandemic is allowable and defines the time period to report lost revenues from the period of the declaration, March 13, 2020, through the end of its HEERF grant performance period.

Finally, the guidance discusses how an institution may calculate its lost revenue. There is significant flexibility in determining a methodology as the CRRSAA does not specify a definitive approach. The guidance provides several examples from a year over year comparison approach to a comparison to previously budgeted revenue or projected revenue.

For a detailed summary of the new guidance, refer to the Department of Education
“Higher Education Emergency Relief Fund” (HEERF I,II and III) Lost Revenue Frequently Asked Questions, published March 19, 2021. We recommend reviewing any future additional guidance published by the Department of Education as the use of the funds are an evolving process. We anticipate additional FAQ’s to be issued in the future.


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