K-12 federal awards: Are you prepared for the challenges ahead?

The Coronavirus Aid, Relief, and Economic Security (CARES) Act appropriated trillions of dollars in relief funds to combat the COVID-19 global health crisis. Billions of these grant fund dollars have been distributed or are earmarked to go to school districts like yours. But as you’re likely experiencing firsthand, there’s a continued lack of timely and consistent guidance available to help you administer your new relief fund grants and previously existing federal programs.

You’ll need to spend extra time and effort strategizing the most effective use of these funds. Even more critical is ensuring that they’re used in accordance with applicable compliance regulations. Here, we identify the federal financial assistance available to school districts and highlight factors to consider when budgeting for the highest and best allowable use of your district’s grants.

What CARES Act funds may be available to my school district?

Below, we’ve outlined the programs under which the most significant CARES Act funding has been made available to school districts.

Child Nutrition Meal Reimbursement: Unanticipated School Closures Program

Due to the national emergency and mandatory closure of schools, your school district may have participated in the Unanticipated School Closure Summer Food School Program (SFSP) during March, April, May, and June 2020. Nationwide and state-specific waivers granted by the U.S. Department of Agriculture (USDA) allowed all sponsors that participate in the National School Lunch Program, School Breakfast Program, and SFSP to serve noncongregate meals to anyone age 18 years or younger residing in the community. The meals served through this program were provided free-of-charge, and reimbursement to school districts was funded through the CARES Act.

The USDA extended a suite of nationwide waivers for the SFSP and Seamless Summer Option through the end of 2020 or until available funding is depleted. The extended waivers allow for congregate or noncongregate meals to be served in all areas at no cost and for parents or guardians to pick up meals for their children.

Coronavirus Relief Fund

The CARES Act established the $150 billion Coronavirus Relief Fund (CRF), which provides for payments to state, tribal governments, and territories and local governments with a population over 500,000. CRF resources have been made available to many school districts through programs that states, other direct recipients, or pass-through entities have established.

The nature and extent of these programs vary widely, and the U.S. Treasury guidance pertaining to school district use of the funds is confusing at best. Hopefully, we’ll receive additional clarification soon. In the meantime, if your district has received resources from the CRF, see our article, “Coronavirus Relief Funds: What to know now,” that explores three important areas to consider as you weed through the ever-changing requirements and resources.

Elementary and Secondary School Emergency Relief (ESSER)

Fund The CARES Act established a $30.75 billion Education Stabilization Fund, of which $13.2 billion was distributed to states. States were then required to allocate 90% of the funds to school districts based on the same federal formulas used to apportion Title I grant funds. Of the remaining 10%, 0.5% is used by states for administration of the grant. The rest is to be awarded to school districts competitively, with priority going to those demonstrating the most severe need.

ESSER grant funds can be applied toward various allowable uses, some of which include coordination of pandemic response efforts, distribution of necessary resources for individual schools such as learning materials and professional development, and other activities to maintain school district operations and keep existing staff employed.

Governor’s Education Emergency Relief (GEER) Fund

Approximately $3 billion of the Education Stabilization Fund was awarded to state governors’ offices for carrying out essential educational services. They may be subawarded to school districts or higher education institutions “most significantly impacted by coronavirus” to support continued educational services for students.

Other options

Some other available grants to K-12 school districts include Head Start, Project SERV, and Child Care and Development Block Grants. School districts are also receiving noncash federal assistance. In September, the U.S. Department of Health and Human Services provided at least 125 million reusable cloth face coverings to states for distribution to schools, allocated based on the number of students from low-income families in each state or territory. There’s also the Coronavirus Food Assistance and Farmers to Families Food Box programs that provide meals to families and students in need, which are sometimes distributed via local school districts.

Best practices for federal grants management and utilization

With the significant amount of federal funds available, you may find it daunting to spend it all effectively. Here are a few tips for maximizing the value of funding while staying in compliance with federal rules and regulations:

• Summarize which grants have been received and what other resources are available. Get a clear understanding of program requirements, including allowable uses and the time period in which eligible expenses must be incurred.
• Confirm whether maintenance of effort, matching, supplement versus supplant, or equitable services requirements apply to the awards.
• Identify which expenditures are eligible. Keep in mind that pre-award spending is allowed for many of the CARES Act-funded grants, so costs that were incurred months ago may qualify. Some expenditures are likely eligible for multiple grants; consider applying these to the most restrictive awards first (in terms of allowable cost and time period).
• Consider whether budgets of previously existing grants can be amended. You may be able to reallocate eligible costs to new emergency-funded grants that may have more restrictive allowability criteria and time frames.
• Be practical about what resources your district will actually be able to use and weigh the cost/benefit of applying for certain funds. Some programs, such as FEMA, are very administratively burdensome, have lengthy post-expenditure approval periods, require nonfederal matches, and have policies that limit the likelihood of application approval.
• Verify that adequate procedures and internal controls are designed and operating effectively, in accordance with applicable Uniform Guidance rules. The significant expansion of federal resources increases your district’s vulnerability to risks of fraud, abuse, and error.
• Determine which cash awards and donations are subject to single audit requirements. If single audits are new to you (or if you’re looking for a refresher!), consider tuning into our webinar, “How COVID-19 funding impacts your single audit and what to do next,” to learn about the requirements for a single audit, what to expect during the audit process, and how you can prepare.
• Ensure that your district has retained documentation in accordance with requirements set forth in OMB Memorandums M-20-17 (rescinded by and replaced with M-20-26 on June 18, 2020) and M-20-26 (expired Sept. 30, 2020), which provided federal agencies the ability to extend administrative relief in certain areas to grant recipients.
• Document all decisions made related to grants management, including the source of information on which the decision was made. Due to the pace at which guidance is updated or amended, it’s particularly important to maintain support for how eligibility of emergency-funded costs was determined.

It’s important to also keep in mind that, in some cases, the specific way federal grants are awarded and monitored will vary by state. Your school district is rarely the direct recipient of federal grants; in addition to understanding the regulations, it’s also important that you obtain information on the applicable compliance requirements from the awarding pass-through entity that’s responsible for monitoring the funding.

The COVID-19 pandemic has created a continuously changing environment for recipients of federal funding, including your district. As future legislation is developed, guidance is updated, and additional challenges and opportunities are uncovered, we’re committed to helping you navigate the complexities.