COVID Has Been a Travesty for Students Getting Services. But District Financial Leaders Can Recoup Some Costs.

The COVID-19 pandemic has taken a toll on students in many ways, not the least of which have been the loss of services funded by IDEA, Title I, and other federal grants programs. As districts move forward with efforts to provide services amid the continuing pandemic challenges, financial considerations are a real concern with budget outlooks unpredictable.

But did you know federal grant funds can be used to cover the cost of approved contracted services that weren’t performed because of COVID-19?

That’s the position the U.S. Education Department has taken in recent guidance, which tells grantees – including school districts – that grant money may be used to cover the costs for canceled services if the contractor was ready and able to perform the services at the time. But there are four things recipients must do to satisfy ED that federal dollars can cover the cost.

1. Explore alternatives. If the contracted services are necessary to carry out the federal award, ED wants grantees and subgrantees to work with contractors to find alternative ways to provide services through things like teleconferencing, training through webinars, and virtual channels for service delivery. If providing services through an alternative means requires modifying the contract, districts should negotiate with their contractors so that costs are “reasonable and necessary.”
2. Seek to recover costs. If services can’t be provided in an alternative manner and money was already paid to a contractor from a federal award, the grantee or subgrantee must seek to recover refundable and nonrefundable costs on those contracts. Many agreements for conferences, training, or other activities related to federal grants contain emergency provisions, and ED requires grantees and subgrantees “to enforce such provisions to the maximum extent possible in light of the COVID-19 pandemic.”
3. Negotiate. If a recipient of an ED grant can’t recover funds paid and the contractor was ready and able to perform the contract if not for COVID-19, the recipient should try to negotiate a reasonable compromise amount.
4. Last resort: Charge the federal grant. If all else fails, ED will allow grantees and subgrantees to charge the appropriate grant for the costs of canceling the contract, provided that the costs were reasonable and incurred to carry out an allowable activity. This means that the rules of 2 CFR Part 200 Subpart E apply.