Finding Text
2022-003: Earmarking Identification of the federal program: U.S. Department of Education ALN 84.425 COVID-19 Education Stabilization Fund (ESF) Criteria or specific requirement: Department of Education requirements for COVID-19 Education Stabilization Fund (ESF) Programs for the ?Matching, Level of Effort, and Earmarking? requirement, as summarized in the 2022 OMB Compliance Supplement states that the American Rescue Plan (ARP) created two specific requirements for the use of the institutional aid portion of ESF Funds (ALN 84.425F). A portion of such funds must be used (a) to implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines; and (b) conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances, described in Section 479A of the HEA. As noted in Question 35 of the ARP HEERF III ARP FAQs, institutions must document how the amount of the HEERF grant spent on these two required activities was reasonable and necessary given the unique needs and circumstances of the institution. Condition: The University performed activities qualifying under both (a) and (b) above; however, they did not allocate the related expenses to the ESF grant as required by the regulations. Cause: The University had previously allocated non-grant funds to the related projects, and determined that any amount allocated to the grant would not materially impact the financial statements. Effect or potential effect: There were no grant funds allocated to meet the earmarking requirement. However, since no required dollar amount or proportion to be spent on these activities was identified in the ARP guidance, it is likely the noncompliance is not material to the grant. Any expenses identified/allocated for the earmarked uses would only reduce other expenses and/or lost revenues already charged to the award. Questioned costs: None Context: Management understood the responsibilities of the University to communicate funding opportunities under the HEERF program and to reduce the spread of the virus but did not fully appreciate the guidance that such costs should be reportable to the grant before using other sources to meet the funding obligations. Repeat finding: No Recommendation: We recommend management review their process around grant requirements to ensure all requirements are met. Views of responsible officials: The University agrees with the finding. Refer to the University?s corrective action plan.