Higher Education Emergency Response Relief Fund Review

Executive Summary

Key Objectives

• How are Federal relief funds being utilized by institutions?
• Are institutions compliant with Federal requirements?
• How and who is being served with the Federal relief funds?

Oklahoma’s institutions of higher education were allocated approximately $180 million of CARES Act funds to respond to effects of the Coronavirus pandemic. The Higher Education Emergency Relief Fund (HEERF) provisions require half these funds be spent on direct student relief; the remainder may be spent on institutional costs incurred by instructional delivery changes due to the pandemic or to defray institutional expenses.

Through this evaluation, the Legislative Office of Fiscal Transparency (LOFT) sought to determine the risk of federal recoupment of grant funds, the status of the requirement that 50 percent of grant funds be used for student relief, and any identifiable best practices that institutions have utilized in managing the federal funds.
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$180 million in HEERF funds were allocated to Oklahoma public colleges and universities. As of February 28, 2021, $114 million has been spent._

Finding 1: The risk of Federal recoupment is low.

Of the $114 million of HEERF spent through February 28th, 2021, approximately 58% has gone to student relief, according to the Oklahoma State Regents for Higher Education. In addition to exceeding the minimum student allocation, LOFT observed strong accountability measures by institutions, including substantive reporting requirements for grantees reflecting prioritization of funds spent and quarterly reporting to the federal Department of Education.

LOFT determined strong compliance measures were driven by institutions’ routine experience with federal grants and contracts. In 2018, federal grants and contracts made up an average of 30 percent of public college and university income, as the chart below shows:

The State’s risk for recoupment of HEERF is further diminished due to the U.S. Department of Education’s statement that accountability for the proper distribution of these grant funds is solely on the individual institutions of higher education receiving them.

Finding 2: Coronavirus has had a broad impact on institutions of higher education, with long-lasting ramifications in Oklahoma.

Enrollment trends will certainly be impacted by COVID-19. Already, disruptions related to Coronavirus have impacted Oklahoma students’ ability to graduate from programs on time. Data reflects that low-income and minority population students are most likely to either not re-enroll or reduce their course load.

Another potential effect on institutions is a reduction of out-of-state students. In Oklahoma, non-residents make up 13.3% of the student population. With out-of-state tuition more than double the rate of in-state tuition, this group has an outsized impact on tuition revenue for many institutions of higher education. International travel restrictions, combined with the shift to expanded online instruction, will likely affect overall enrollment and institutions’ revenue streams. Last, reduced use of campus residences could further reduce institutional revenue.

Out-of-state students make up 13.3 percent of the student population in Oklahoma, but out-of-state tuition is more than double in-state tuition on average. This indicates that out-of- state students account for than 26 percent of tuition revenue for colleges and universities.

Finding 3: Institutions have exhibited many best practices in utilizing Federal relief funds.

Many institutions of higher education developed and implemented proactive strategies for distributing funds, separated the approval and fund expenditure functions, and developed internal guidance that is more stringent than federal requirements.

Institutions provided LOFT with examples of how they determined best use of the Federal aid, including creating internal checks and balances, taking advantage of Federal training opportunities, and creating committees to review major purchases.