California universities criticized for spending COVID student aid on other expenses

Some University of California (UC) and California State Universities (CSU) did not maximize COVID-19 federal relief funds, instead using money that could have gone to students, according to a new report.

The report, released Thursday by the California State Auditor, reviewed the aid expenditures of six universities: UC Merced, UC Riverside, UC San Diego, CSU Chico, CSU Long Beach and CSU Sonoma. After review, State Auditor Elaine Howle found that most of the campuses "did not maximize" portions of the $435 million in combined Higher Education Emergency Relief Funds, (HEERF) institutional aid to help offset the cost of the pandemic and provide financial aid to students.

The HEERF money is federal tax dollars allocated by the U.S. Department of Education.

The report said relief funds were not maximized in part because some campuses used HEERF funds to pay for costs that could have been reimbursed by the Federal Emergency Management Agency (FEMA). In March 2020, former President Donald Trump declared a national emergency due to COVID-19, which authorized FEMA to reimburse universities for costs associated with pandemic response.

After review, Howle discovered four of the six campuses – CSU Chico, CSU Long Beach, UC Merced and UC San Diego – either spent or planned to spend about $47 million in HEERF funds that FEMA could have instead reimbursed. If these campuses had obtained FEMA reimbursement, the report says that the HEERF funds could have been used for other pandemic-related costs, such as providing additional relief aid to students.

As an example, the report notes that CSU Long Beach spent $2.8 million in HEERF funds on setting up a temporary medical tent, conducting testing and administering COVID-19 vaccines – all of which were eligible for FEMA reimbursement. In addition, the university planned to spend $2.3 million of its remaining institutional aid on additional expenses that qualify for FEMA reimbursement.

If the school obtains the FEMA reimbursement, the amount is equivalent to providing an additional $500 in grant funds to 10,000 students, the report says.

In addition, the report found that two campuses – UC Riverside and UC San Diego – could have received an additional $2.8 million in minority-serving institutions (MSI) funds if they had applied for an MSI designation. The report estimates that UC Riverside lost out on about $2.2 million in certain MSI funds because it did not apply to keep its MSI status in 2020.

When the auditor's office approached the universities about these findings, the report said that most campuses "indicated that they had not submitted the expenses to FEMA for reimbursement because the claims process is burdensome and they did not know whether the expenses were reimbursable." Officials from CSU Long Beach and CSU Chico said that it could take years for FEMA to resolve claims, but the report indicates that it currently takes FEMA about six to twelve months to review and approve reimbursements.

The report notes that, while campus officials expressed reluctance to apply for FEMA reimbursement due to the amount of time it can take to process claims, there are still opportunities for university systems to submit for FEMA reimbursement before the reimbursement deadline. And Howle is recommending that the universities do so.

"Regardless of the amount of time it takes FEMA to process these claims, the millions of dollars the campuses could receive should outweigh their reluctance to engage in this process," the report stated.

Campuses prioritized student grant applications differently

The audit of the six campuses also found that the universities utilized different processes to distribute about $352 million in HEERF funds specifically designated for student aid grants.

For CARES Act student grants, all three CSUs reviewed during the audit and UC San Diego used an application process where students could request aid for pandemic-related needs, the report stated. Each campus then made automatic grants to certain students while allowing others to apply for additional grants if they could not pay for all their pandemic-related expenses.

However, the audit found that the application process for these grants lacked uniformity between campuses.

According to the report, CSU Chico and UC San Diego required students to indicate requested aid amounts in predetermined categories (housing, technology, etc.), while CSU Long Beach and CSU Sonoma required students to write a description outlining their financial hardship and give reasons for the expenses. School officials then reviewed those descriptions to determine whether those expenses were eligible for aid.

"These differences in the application processes at the CSU campuses meant that students encountered different requirements and an inconsistent approval process when they applied for HEERF grants," the report said.

The report notes an example of two students, one from CSU Long Beach and one from CSU Sonoma, who submitted similar applications for aid. Yet, because CSU Long Beach interpreted the CARES Act requirements differently than CSU Sonoma and had a different review process, the Long Beach student did not receive grant funds while the student at Sonoma did.

The audit also found that campuses had inconsistencies in awarding automatic grants to students. The report states that UC San Diego awarded automatic grants in one amount, while UC Riverside awarded multiple levels of grants based on a student's expected family contribution (EFC) and family circumstances. In addition, CSU Long Beach awarded an automatic grant of some amount to students at each EFC level. CSU Chico and Sonoma excluded students whose families had a higher EFC.

Report recommends action from universities, legislature

The report recommends CSU Chico, CSU Long Beach, UC Merced and UC San Diego review expenses incurred due to the pandemic and submit for FEMA reimbursement. It's also recommended that the schools use any remaining HEERF funds initially spent or planned for FEMA-eligible grants to replace lost revenue or award grants to students.

The report also recommends that the UC Office of the President and the CSU Chancellor's Office direct each of their respective 33 combined campuses to submit a report summarizing pandemic-related expenses incurred between January 2020 and December 2021 to determine what is eligible for FEMA reimbursement.

If the UCOP and CSU Chancellor do not ensure their respective campuses submit eligible expenses for FEMA reimbursement, the report says the state legislature should then "​​direct the CSU Chancellor's Office and UCOP to do so or explain why submitting these claims was not feasible."