American Rescue Plan Act of 2021: How Will You Spend Your Institutional Funds?

Guidance for relief funds allocated for students and institutions through the American Rescue Plan Act of 2021 (ARPA), also known as the Higher Education Emergency Relief Fund (HEERF) III, departs from the guidance for the relief funds provided in the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), also known as HEERF II.

The guidance for ARPA funds requires some of the institutional portion be used to fight the spread and transmission of COVID-19 on campuses and among students, faculty, and staff members.

Below, we provide insight into requirements and factors educational organizations should consider when determining where to allocate ARPA funds. Please note, legislation and guidance on this topic constantly evolve. Information is current as of date of publication.

Additional Requirements Under ARPA

The ARPA specifically requires that if an institution doesn’t use all the institutional portion for emergency financial grants to students, a portion of institutional funds received must be used to both:

  • Implement evidence-based practices to monitor and suppress COVID-19 under public health guidelines
  • Conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to recent unemployment of a family member or independent student, or other circumstances

How Much Can You Allocate to Suppress COVID-19 and Direct Outreach, and What Expenses Are Allowed? 

The ARP doesn’t provide any specific guidance, however, you have some flexibility.

It’s useful to follow the Cost Principles in the Title 2 of the Code of Federal Regulations (CFR) part 200 subpart E and use the reasonable and necessary criteria.

Importance of Documentation

It’s important for institutions to document the following:

  • Strategies used
  • Evidence to support those strategies
  • Explanation of how strategies are in accordance with public health guidelines
  • Manner and extent of direct outreach to financial aid applicants
  • Explanation of how the amount spent on these activities was reasonable and necessary given the unique needs and circumstances of the institution

This documentation will be critical for your single audit. In addition, the Department of Education is considering following up by collecting more information on institution’s implementation of these two additional requirements in their 2021 HEERF Annual Report.

What Activities Meet the Criteria for Using HEERF III Funds?

The Department of Education provides some guidance for the possible uses of funds that will meet the new requirements noted above. Here are some possible uses that would meet the criteria.


  • Establish a diagnostic or screening testing strategy, such as setting up a testing site, purchasing tests, or hiring additional personnel to administer tests
  • Hire personnel to support contact tracing efforts in collaboration with local public health authorities


  • Set up vaccination sites on or off campus to bring the vaccine to students, faculty, and staff, including costs of bringing sites to rural and satellite locations and costs associated with building awareness and confidence of the vaccine among students
  • Provide masks and other Personal Protective Equipment (PPE) to students, faculty, and staff
  • Support clean and sanitary campus environments, including purchasing hand sanitizer and handwashing stations that can be placed throughout the campus
  • Cleaning and disinfection
  • Enhance ventilation in classrooms or common areas
  • Use mask campaigns to increase mask compliance on campus
  • Implement physical distancing guidelines, such as modified layouts
  • Costs associated with vaccination efforts
  • Redesign food service facilities
  • Develop training and communication systems to communicate with students
  • Costs associated with campus and local outreach on the benefits of vaccination as a virus-mitigation strategy

Reduce Barriers to Vaccination

  • Pay for time off for staff to get the vaccine
  • Provide sick leave to employees to get the vaccine
  • Spread awareness and build confidence in getting vaccinated, including setting up clinics for students to receive vaccinations or other confidence and awareness building efforts

Support Students

  • Procure additional space both on or off campus to house students and support other costs associated with meeting the basic needs of students in isolation and quarantine
  • Provide academic support services and mental health services for students in isolation or quarantine
  • Support coping and resilience for students

What Can You Do with Leftover HEERF III Funds?

Once you disburse any amounts of your institutional portion of ARPA funds to students, leftover amounts can be used to defray expenses associated with COVID-19, including lost revenue for any expenses incurred back to March 13, 2020, the date of the declaration of the national emergency. 

You will, however, need to ensure you first expend amounts for the two new required activities.

There’s no specific threshold or amount that institutions must use to implement the two new required activities, but each institution’s needs and circumstances are different and should be considered when determining how much to spend, and in what manner, to meet the requirements.

We’re Here to Help

To learn more about how funds can be spent, contact your Moss Adams professional.

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