April 24, 2020

State Budget Update – Mr. Jason Schrock, CDHE, provided an update on the state budget situation and its implications for funding to higher education.  At this time, there is not a clear picture of the magnitude of the state budget shortfall and the cuts the state needs to make to programs.  There will be a state revenue forecast on May 12, which is expected to show a budget shortfall of around $3 billion.  Also, the state needs to determine how it will use the $1.7 billion it received from the federal CARES Act.  Recent U.S.  Treasury guidance states that the funds cannot be used to address state revenue shortfalls, only for expenditures necessary due to COVID-19.  As a result, higher education operating funding from the state is likely to receive a cut.  State funding for some Department programs and initiatives is also likely to be reduced or eliminated in the budget.


Federal Funds for Higher Education through the CARES Act -- Ms. Emily Burns and Ms. Emma Fedorchuk, CDHE, discussed the federal funding the state’s higher education institutions are directly receiving through the federal Higher Education Emergency Relief Fund (HEERF). The two primary streams of HEERF funding are allocated by a formula outlined in the CARES Act. Of this funding, 50% is dedicated to aid directly to students. Per guidance released by the federal Department of Education (ED), this funding cannot be used by the institution to reimburse itself for any refunds offered to students, or to pay a student’s existing balance – it must take the form of a direct cash grant. Institutions have discretion in how they award this student aid, but are encouraged by ED to prioritize students with need. The remaining 50% of these funds are to support institution budgets. Institutions must first apply for the student aid portion of HEERF funds before they can receive the institution portion. Institutions can use this portion of the funds to reimburse themselves for refunds to students, as well as hardware and software purchased on behalf of students, provided those expenses occurred on or after March 13, 2020. Further guidance from ED on both streams of funding, as well as other funding sources created by the CARES Act, is forthcoming.


Higher Education Institution Finances Mr. Schrock provided an update on the impact of COVID-19 on the state’s institutions’ finances and budgets.  The near-term financial hit from refunds and credits to students and lost revenue from auxiliaries and other institutional activities is estimated at around $330 million so far.  Due to the uncertainty for FY 2020-21 regarding state funding and enrollment, institutions are working with scenarios for their budget planning purposes.  Institutions are looking at a range of options to address their expected budget shortfalls, such as cuts in facility maintenance, consolidating and eliminating academic programs, reducing student support services, and compensation and workforce reductions.