Coronavirus and Its Impact on Education

This memo is a follow up to last week—and the emails you have received from us since—regarding the Coronavirus Aid Relief and Economic Security Act (CARES Act). After days of negotiations and failed votes, the revised “third tranche” of federal legislation overwhelmingly passed the Senate on Wednesday evening (March 25) and will be taken up by the House this morning. Below is a summary of: (1) highlights of the CARES Act; (2) education provisions in the CARES Act; (3) U.S. Department of Education (USED) update; and, (4) status of state legislatures.

Highlights of the CARES Act

The CARES Act directs $2 trillion to provide assistance to taxpayers and families, expanded unemployment insurance, a retention tax credit for employers, and hundreds of billions in loans and grants to small and large businesses (e.g., aviation sector), among other things. Full MWC summary can be found here. It also provides $340 billion in FY20 supplemental appropriations to support federal relief efforts. Full MWC summary can be found here.

One large federal investment, which has not received much media attention, is a $150 billion grant to governors (i.e., States, Territories, and Tribal governments) to use for expenditures incurred due to the coronavirus public health emergency. This comes after a letter the National Governors Association sent to negotiators on March 20. Use of those funds are broad: (1) necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) not accounted for in the budget most recently approved as of the date of enactment of this section for the State or government; and (3) incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. (Note: this pot of money is important to keep in mind as an additional potential funding source for education.)

Education Provisions in the CARES Act

The CARES Act contains several provisions related to education. The U.S. Education Department (USED) will receive $30.9 billion total, of which $30.75 billion will go directly to states, local school districts, and institutions of higher education “to help schools, students, teachers, and families with immediate needs related to coronavirus.” Those funds are as follows:

$3 billion for the “Governor’s Emergency Education Relief Fund” to make in additional grants to elementary and secondary education schools and institutions of higher education that have been most significantly impacted by coronavirus—with the goal of ensuring the ongoing functionality of schools and institutions. USED Secretary DeVos will invite governors to apply for funds not later than 30 days of enactment of the bill, and will approve (or deny) applications no later than 30 days after receipt. The money allocated to states is based on 60 percent of their relative population of individuals ages 5-24, and 40 percent of their relative number of children counted under section 1124(c) of the Elementary and Secondary Education Act (ESEA) (i.e., children ages 5-17 who are: below the poverty line; neglected, delinquent, or in foster homes; and, above the poverty line).

$13.5 billion in funding for the “Elementary and Secondary Education School Emergency Relief Fund” with 12 permissible, wide-ranging uses of those funds such as principal and school leader support, purchasing education technology (e.g., hardware, software, connectivity), continuing to employ existing staff, etc. Similar to the Governor’s Fund, USED Secretary DeVos will invite State Education Agencies to apply within 30 days of enactment of the bill. Of those funds allocated to states, not less than 90 percent will be directed to Local Education Agencies through the Title I, Part A formula of ESEA.

$14.25 billion in funding for the “Higher Education Emergency Relief Fund” to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus, excluding payment to contractors for pre-enrollment recruitment activities, endowments, or capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship. Not less than 90 percent of those funds will be directed to higher education institutions through the Title IV formula of the Higher Education Act and apportioned by 75 percent according to the relative share of full-time equivalent enrollment of Federal Pell Grant recipients (who are not exclusively enrolled in distance education courses prior to this emergency) and 25 percent according to the relative share of full-time equivalent enrollment of students who were not Federal Pell Grant recipients (who are not exclusively enrolled in distance education courses prior to the emergency).

There is additional funding directed to Project SERV ($100 million); Howard University ($13 million); Gallaudet University ($7 million); Student Aid Administration ($40 million); and the Office of the Inspector General ($7 million).

Other key education policy provisions include:

• Requires the Secretary of Education to defer student loan payments, principal, and interest for 6 months without penalty;
• Waives the institutional matching requirement for campus-based aid programs (e.g., GEAR UP);
• Allows institutions to transfer unused work-study funds to be used for supplement grants;
• Allows institutions to issue work-study payments to students who are unable to work due to work-place closures as a lump sum or in payments similar to paychecks;
• Excludes the term from counting toward lifetime Pell eligibility for students who dropped out of school as a result of the coronavirus;
• Provides the Secretary of Education with waiver authority to provide waivers from the Elementary and Secondary Education Act, except civil rights laws; and,
• Requires the academic year to be counted towards TEACH grant obligations or Teacher Loan Forgiveness, if teachers could not finish the year of teaching service as a result of the coronavirus.

USED Update

On March 20, USED announced that it will grant waivers to states that are unable to comply with mandatory testing requirements for the 2019-2020 school year due to the pandemic. Any state that receives a one-year waiver may also receive a waiver from the requirement that testing data be used in the statewide accountability system. According to EdWeek, 48 states, Washington, DC, and Puerto Rico have been granted initial approval for a waiver or are currently seeking a waiver. USED also released a supplemental fact sheet addressing serving children with disabilities during the coronavirus national emergency.

In addition to waiving interest on federally held student loans, President Trump announced on March 20 that borrowers may defer student loan payments for at least 60 days. Borrowers must request an administrative forbearance to suspend loan payments.

Later today, USED Secretary DeVos will be participating in President Trump’s daily COVID press conference to discuss online learning and school lunches with U.S. Department of Agriculture Secretary Sonny Perdue. Secretary DeVos is expected to talk about distance learning recommendations for K-12 education as well as institutions of higher education.

Status of State Legislatures

According to the National Council of State Legislatures (NCSL), as of March 25, at least 24 state legislatures have postponed their legislative session due to the coronavirus. Those states include: Alabama, Arizona, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Nebraska, New Hampshire, New York, Oklahoma, Rhode Island, South Carolina, Tennessee, Vermont, and Wisconsin. Additionally, the Missouri Senate, New Jersey Assembly, and Ohio House have postponed their sessions.

The executive branch and state legislatures across the country are taking action in response to the coronavirus. Every state and Washington, DC has made an emergency declaration, and according to NCSL, at least 32 states have introduced legislation related to coronavirus.

Conclusion

With today’s expected House passage of the CARES Act and the President’s subsequent signature, we will track the federal guidance that will follow in the coming days and weeks as states begin to draw down on the new resources. Congress is not expected to return to Washington until the week of April 20, and conversations are already underway on what could be a fourth phase of legislation regarding coronavirus. Our Education Team will continue to keep you posted, and please refer to our Coronavirus (COVID-19) Facts and Resources website in the meantime.