Washington Watch: A look at the various CARES Act funding streams

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The U.S Education Department (ED) on Thursday released CARES Act institutional funding for Titles III and V of the Higher Education Act. At the same time, it allocated the bill’s institutional funding through the Fund for the Improvement of Postsecondary Education (FIPSE).  

Until then, the Department had been quiet for more than a month about its plans for allocating these institutional funds, which total almost $1.4 billion.

The release of these monies caught many community college campuses by surprise; they have been overwhelmingly focused on using the student and institutional portions of the CARES Act formula grants. (ED is expected to release imminently yet more guidance in this area.)

How various funds are disbursed

Congress gave the department broad flexibility in allocating CARES Act Title III and V funds, which include Minority-Serving Institutions (MSIs), Hispanic-Serving Institutions, Strengthening Institutions, Historically Black Colleges and Universities (HBCUs), Predominantly Black Institutions, Tribally Controlled Colleges, Asian American and Pacific Island-Serving Institutions and other institutional aid programs. 

The department will award the vast majority of the MSI, HBCU and Tribal-Controlled institutional funds to all eligible colleges on a formula basis. (Quite understandably, ED chose not to undertake a new set of grant competitions, though under the CARES Act that was an option.) This formula is mandated by Congress for the broader program CARES Act program that was announced four weeks ago. It takes into account both Pell Grant full-time equivalent (FTE) recipients and all non-Pell Grant recipients, also on an FTE basis.  

For institutions that did not qualify for MSI funding, but which are currently eligible for Title III-A (Strengthening Institutions Program) funding, ED used the same allocation formula to distribute funding. Under the department’s framework, colleges that receive MSI funding do not qualify for Title III-A. 

FIPSE funds

Colleges are given broad latitude in spending these new Title III and V funds. For example, institutions can use them to recoup revenue losses and general expenses already incurred because of the pandemic. And although recipients are encouraged to use funds for students (and the CARES Act implies that at least half of such funds must be directed to students), there is no requirement along those lines. However, if colleges allocate Title III and V funds to students, they must follow the rules applied to the CARES Act’s emergency student grants.

As for the FIPSE funding, the CARES Act states that priority should go to any institution that: (1) did not receive in total at least $500,000 from the other two large institutional pots (formula grants and Titles III/V) and (2) “demonstrates significant unmet needs related to expenses associated with coronavirus.” ED took Congress up on the $500,000 threshold and is using FIPSE funds to ensure that each Title IV-eligible institution receives that amount through the CARES Act.  

Consequently, many colleges that otherwise qualified only for small amounts from the other two funding streams benefit greatly from the FIPSE funds. This makes for an unexpected list of awardees — the overwhelming majority of the FIPSE grants will go to extremely small private colleges, many religiously affiliated, and scores with fewer than 100 students. However, some smaller community colleges will also receive FIPSE funding. 

Next steps

The American Association of Community Colleges’ (AACC) advocacy on stimulus legislation continues. All colleges are encouraged to contact Congress to communicate AACC’s stimulus priorities. The challenges that students and higher education institutions now face continue to receive extensive media coverage, and even amidst society-wide appeals to Congress for help, there are solid prospects for further support.  

AACC expects to provide further guidance on the implementation of the CARES Act later this week, based in part on the forthcoming guidance on the formula grants. Also, it appears that the long-awaited final regulations on Title IX will be published very soon. Once that happens, AACC will provide a summary and sponsor a webinar. 

About the Author

David Baime
is senior vice president for government relations and policy analysis at the American Association of Community Colleges.