Richmond Fed, The Higher Education Emergency Relief Fund (HEERF) and its impact (Regional Matters) (Regional Matters 2023-08-30, 2023-08)

Summary

A Regional Matters article from the Richmond Fed dated August 31, 2023, "The Higher Education Emergency Relief Fund (HEERF) and Its Impact on Fifth District Community Colleges," by Laura Dawson Ullrich and Meher Narielvala. It states that institutions of higher education received a total of $77 billion via HEERF and that Fifth District institutions received $7.2 billion, approximately 9.3 percent of total dollars granted nationally. As of June 30, 2023, $6.0 billion of the $6.1 billion in student and institutional funds awarded in the district had been spent, with $115.2 million still available to be spent by June 2024. It reports that Frederick Community College in Maryland spent 83 percent of institutional HEERF funds on replacing lost revenue.

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The Higher Education Emergency Relief Fund (HEERF) and Its Impact on Fifth District Community Colleges

By Laura Dawson Ullrich and Meher Narielvala

Regional Matters

August 31, 2023

As part of the various government stimulus programs in response to the COVID-19 pandemic, institutions of higher education received a total of $77 billion via the Higher Education Emergency Relief Fund (HEERF) . HEERF included funds for a broad array of higher education programs, but most funds were allotted for direct student support and for institutional purposes.

The CARES Act and the American Rescue Plan required that at least 50 percent of a college or university's HEERF allotment be given to students in the form of direct grants. The Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, which made additional HEERF funds available after the CARES Act, required that institutions spend at least as much (in nominal dollars) on students as they were required to spend under the CARES Act. Institutions could choose to spend any remaining funds "... to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus. " The only disallowed institutional expenditures were recruitment activities, marketing, endowments, capital improvements to athletic facilities, or religious worship.

HEERF funds expired in June 2023, apart from money allotted to schools that received a one-year extension to June 2024. So how much money did Fifth District colleges and universities receive? Have they spent the funds? And how does this impact institutions like community colleges that saw especially large enrollment declines during the pandemic?

HEERF in the Fifth District

Institutions of higher education in the Fifth District received $7.2 billion total in HEERF dollars, amounting to approximately 9.3 percent of total dollars granted nationally. Of the $7.2 billion, $6.1 billion was allotted for student and institutional funds. The remaining funds were distributed to specific educational programs and historically Black colleges and universities (HBCUs). Student and institutional funds were distributed to all levels of higher education, from large research universities to small community colleges. While allocation mechanisms differed slightly by stimulus bill, HEERF funds were generally distributed based on two indicators: the number of students whose academic experience had been disrupted due to the shift to online learning and the percentage of impacted students who were Pell Grant recipients. Schools with larger percentages of Pell Grant recipients who also did not have many online classes prior to the pandemic received larger allotments.

Fifth District colleges and universities have now spent most of their student and institutional HEERF dollars. As of June 30, 2023, $6.0 billion of the $6.1 billion awarded in the district had been spent, with $115.2 million (1.9 percent of the total) still available to be spent by June 2024 (for schools that received an extension).

Data from the Department of Education indicate that the majority of the money that remains falls in the category of institutional funds. Almost all required student funds were spent by June 2023.

HEERF Dollars and Community Colleges

Community colleges were hit especially hard during the pandemic as schools across America saw dramatic declines in enrollment. (See " Community College Enrollment in Fall 2021 and Cumulative Enrollment Impacts .") HEERF funds provided community colleges an unprecedented amount of money that could be used to support students in need and for capital and technology improvements. Institutional HEERF funds could also be used to offset revenue losses associated with declining enrollment.

The Department of Education has released HEERF spending data for all but five Fifth District community colleges. On average, based on the schools with available data, rural community colleges received more HEERF funds per student than urban community colleges. This is not surprising, as rural community colleges have higher percentages of Pell Grant recipients and may also have been less likely to offer online classes before the pandemic.

How the Dollars Were Spent

So how did district community colleges spend their institutional HEERF dollars? The answer varies considerably. Frequently cited expenditures in the Department of Education HEERF expenditure data include technology hardware, distance learning supplies, enhanced health supplies, and campus safety. Community colleges have also shared with us that they used HEERF dollars for long-awaited technology and classroom upgrades as well as other campus improvements.

Some community colleges chose to use institutional HEERF funds to offset revenue losses. According to the Chronicle of Higher Education , over 70 percent of community colleges saw a decline in net tuition revenue between 2019 and 2021, falling an average of 6.3 percent. Frederick Community College in Maryland spent 83 percent of institutional HEERF funds on replacing lost revenue, and they certainly aren’t alone. Several community colleges in the district spent 75 percent or more of institutional HEERF dollars on revenue replacement, including Midlands Technical College in South Carolina, Pierpont Community and Technical College in West Virginia, and Lenoir Community College in North Carolina. While the use of funds for revenue replacement might have been a rational choice, this might make the coming year more difficult for these schools. Enrollment has not generally returned to pre-COVID-19 levels, and revenue losses may now need to be realized. This could include finding new sources of revenues, such as grants, or reducing costs at the institution.

Our outreach has also indicated that some community colleges spent the money on programs and positions that now lack funding. For example, one community college in the district hired student navigators at high schools in their service area. Now that HEERF is expiring, these positions will be eliminated. Another created an innovative noncredit training program in information technology that has been extraordinarily successful with job placement but faces serious funding uncertainty moving forward.

Conclusion

Higher education institutions were just one of many groups that received significant stimulus funding during the pandemic. HEERF dollars helped institutions address the needs of their students and continue operations during very uncertain times. Schools that used the dollars for one-time projects may not be impacted negatively by the expiration of HEERF. However, schools that used the money for revenue replacement or recurring items such as faculty or administrative costs may have more difficulty operating in a post-HEERF world.

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Joseph Mengedoth

Sonya Ravindranath Waddell

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