Program

COVID-19 Federal Assistance e311

Topics

Education

Is assistance with community college, college tuition or other higher education challenges an eligible use of ARP funds?

The U.S. Department of the Treasury’s (“Treasury”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Interim Final Rule (“The Rule”) provides recipients with a flexible approach that sets guidelines on eligible uses of Fiscal Recovery Funds (“FRF”) and affords municipal officials the discretion to direct funds to the eligible uses of greatest need.[1] A discussion addressing some of the Treasury’s recent guidance on using American Rescue Plan Act (“ARP”) funds for educational programs can be found in COVID e311 question 112.[2]

The Rule focuses on eligible uses of funding to address disparities in early education; postsecondary education is not mentioned. Furthermore, “tuition” is not explicitly defined in the ARP[3] or The Rule.[4]

Having said that, the use of ARP funding for higher education (post-high school) tuition or for other costs related to degree completion may arguably align with the “assistance to households” category. According to the eligible uses defined in 35.6(b)(8),[5] recipients may use funds to respond to the public health emergency or its negative economic impacts, including assistance to households.[6] Assistance to households can include job training and cash transfers from the recipient to individuals, but would require: (i) that a household or population experienced economic harm; (ii) that the use of funds is in response to the COVID- 19 public health emergency; and (iii) the amount is not grossly in excess of the amount needed to address the negative economic impact identified by the recipient.[7]

Further clarification on appropriate use of ARP funds for these purposes is provided within The Rule:[8]

In assessing whether a household or population experienced economic harm as a result of the pandemic, a recipient may presume that a household or population that experienced unemployment or increased food or housing insecurity or is low- or moderate-income experienced negative economic impacts resulting from the pandemic. For example, a cash transfer program may focus on unemployed workers or low- and moderate-income families, which have faced disproportionate economic harms due to the pandemic. Cash transfers must be reasonably proportional to the negative economic impact they are intended to address. Cash transfers grossly in excess of the amount needed to address the negative economic impact identified by the recipient would not be considered to be a response to the COVID-19 public health emergency or its negative impacts. In particular, when considering the appropriate size of permissible cash transfers made in response to the COVID-19 public health emergency, State, local and Tribal governments may consider and take guidance from the per person amounts previously provided by the Federal government in response to the COVID-19 crisis. Cash transfers that are grossly in excess of such amounts would be outside the scope of eligible uses under section 602(c)(1)(A) and 603(c)(1)(A) and could be subject to recoupment.

As described in both the legislation and The Rule, a recipient may apply ARP funds to four categories of use, one of which is “the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency.”[9]

“Government services” are partially defined within The Rule:[10]  

Sections 602(c)(1)(C) and 603(c)(1)(C) of the Act provide recipients with broad latitude to use the Fiscal Recovery Funds for the provision of government services. Government services can include, but are not limited to, maintenance or pay-go funded building of infrastructure, including roads; modernization of cybersecurity, including hardware, software, and protection of critical infrastructure; health services; environmental remediation; school or educational services; and the provision of police, fire, and other public safety services.

If a recipient chooses to apply ARP funds to post-high school programs, the recipient likely will need to tie its use of ARP funds to the provision of government services and to the extent of COVID-related revenue reduction.[11] For example, if a community college, as a government service, is determined to be a municipality’s area of greatest need, then the use of ARP funds for that college would require a nexus to the municipality’s reduced revenue calculations. Treasury’s guidance addresses how recipients can calculate the extent of the reduction in their general revenue.[12]

As “tuition,” post-secondary education, and assistance to individuals in the form of cash transfers for educational purposes are not explicitly addressed in The Rule, municipalities may consider sending comments and inquiries regarding tuition assistance. These would need to be directed to and received by Treasury on or before July 16, 2021, and can be submitted electronically through the Federal eRulemaking Portal: http://www.regulations.gov. All comments should include “Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule Comments” in the caption. Comments should include the inquiring person’s name, organization affiliation, address, email address, telephone number and where appropriate, a short executive summary. Irrespective of whether educational disparities or tuition assistance are considered by Treasury to be government services or assistance to households, municipalities would need to provide either lost revenue information or demonstrate that a household or population experienced economic harm as a result of the pandemic.

Having said that, it is important to remember that Treasury has not clarified whether post-high school educational programs are included in “school or educational services” or should otherwise be considered as eligible “government services to the extent of the [recipient’s] reduction in revenue” due to COVID-19. Again, The Rule focuses on eligible uses of funding to address disparities in early education; postsecondary education is not mentioned.

Last Updated: June 22, 2021

[1] Treas. Reg. 35 CFR 31 at 118, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[2] Bloomberg Cities Network, “Can municipalities use ARP funds to fund educational programs (e.g., Pre-K classrooms or gun violence prevention programs)?” available at: https://bloombergcities.jhu.edu/faqs/can-municipalities-use-arp-funds-fund-educational-programs-eg-pre-k-classrooms-or-gun-violence

[3] American Rescue Plan Act (H.R.1319, 117th Cong. § 9901 (amending 42 U.S.C § 801

et seq., at § 603)), available at: https://www.congress.gov/117/bills/hr1319/BILLS-117hr1319enr.pdf.

[5] Id at 141.

[6] Id at 77.

[7] Id at 33.

[8] Id.

[9] Id at 7.

[10] Id at 60.

[11] Id at 143.

[12] Id at 144.