8
Jun
2021
08.06.2021

2021 Private Education Virtual Conference – Session 2 Recap

The second session of Brown Edwards’ first-ever virtual conference took place on Friday, May 21, 2021 with attendees from 11 different states stretching from coast-to-coast. The session featured speakers from The National Association of College and University Business Officers (NACUBO), Southern Association of Colleges and Schools Commission on Colleges (SACSCOC) and Brown Edwards.

 

Session 1: Capitol Hill Updates

Presenter: Megan Schneider, Senior Director, Government Affairs, NACUBO

For the last 14 months, the pandemic has dominated Capitol Hill but not anymore! Lawmakers are working on other items such as comprehensive immigration reform, infrastructure, college athletics and HEA reauthorization.

 

Infrastructure

Significant potential funding could be a part of the infrastructure legislation. Both The American Jobs Plan and The American Families Plan, contain several non-traditional infrastructure components that could prove to be beneficial for higher education including R&D, digital infrastructure, high-speed broadband, STEM programs, , infusion for Pell Grants and new grant programs.

 

President’s Budget Request

Although the President puts together a budget request, it is merely his recommendations as to how he feels the budget would best be utilized. Congress will ultimately divide the funding.

The President’s Budget includes:

  • Increase Pell Grants

  • Increase research funding

  • Support for minority-serving institutions

  • Upgrade STEM paths at MSIs

  • Fund women's programs at MSIs

  • Fund renewables at tribal colleges

  • Attract minority students to STEM

 
Federal Agencies
Department of Education (DOE)

New guidance for the American Rescue Plan Act (ARPA) has been released by the DOE.

  1. The allocation table has been split into several columns that shows the total share, institutional share, emergency grants and student share.

  2. A comprehensive, 28-page FAQ document was released (and is a MUST read, according to Megan).

  3. Voluntary return of funds form – an institution can elect to return all or some of their ARPA Allocations.

    1. If you return funding, the Department. of Education will redistribute it to schools who have greater needs due to COVID.

  4. Quarterly reporting form for institutional share was released and is intended to work in conjunction with previous guidance.

The NACUBO website features a resource center containing various analysis, tutorials, town halls and resources such as Title IV and Student Accounts Information, ED Campus reopening best practices and guidance pertaining to ARPA, CRRSAA and CARES Act HEERF allocations.

In addition to ARPA allocations, Megan covered the new IRS HEERF guidance regarding 1098-T reportability and changes coming to Title IX.

Department of Labor (DOL)/Department of Homeland Security (DHS)

Not all federal agency projects are moving forward. In fact, some are moving backwards!

The DOL and DHS have announced they are delaying a series of changes that would significantly alter the potential for international workers to obtain H-1B visas. If these changes were enacted, they would dramatically change the prevailing wage levels for employment-based visas and eliminate the H-1B visa lottery system in favor of a system that prioritized visas based on applicants’ earnings. (NACUBO has consistently opposed both rule changes)

The National Labor Relations Board (NLRB) has also announced that it is withdrawing a nearly final rule change that would have declared student workers not to be “employees” in relation to their ability to unionize. The NLRB states that the rule change, which was first proposed in September 2019, is being withdrawn “in order to focus its limited resources on competing Agency priorities.”

The Supreme Court

In March, the Supreme Court heard oral arguments in NCAA v Alston, a closely-watched case that will determine whether certain NCAA rules violate the antitrust laws.

NACUBO and ten other associations have submitted an amicus brief to the Supreme Court in support of the NCAA and eleven athletics conferences in this case that could alter the current model of intercollegiate athletics.

Lawmakers have taken a high interest on this case and await the Court’s decision, expected by the end of June. Starting July 1, various state laws are slated to take effect that will prevent colleges, universities or athletic conferences from prohibiting student-athletes from receiving compensation from third parties for the rights to their name, image and likeness (NIL).

 

Session2: Financial Responsibility Supplemental Schedule

Presenter: John Hash, Partner and Higher Education practice co-leader

Most people in this industry have dealt with the new Financial Responsibility Supplemental Schedule (FRSS) requirements, so John decided to focus on some of the more confusing items.

Debt Obtained for Long-Term Purposes (DOLP)

There are two categories of DOLP, those related to net PPE (excluding CIP) and DOLP for CIP. DOLP related to net PPE is further divided into pre-implementation and post-implementation traches.

Pre-implementation DOLP is defined as debt to the extent of net PPE used in calculating the composite score under prior regulations. The new regulations were effective July 1, 2020 and are applicable to 2020 financial statements. Generally, the amount to be reported as pre-implementation DOLP would use as a starting point the ending debt as of June 20, 2019 and would be reduced for principal payments that occurred in the 2020 year. Any capital lease obligations under Topic 840 would also be considered DOLP under the new regulations.

Post-implementation DOLP is defined as debt obtained subsequent to June 30, 2019 for the acquisition or development of PPE, including capital leases (Topic 840) or right-of-use assets (Topic 842). The debt agreement must state the purpose is to fund PPE, not just state the debt is collateralized by PPE.

DOLP for CIP will include additions in the 2020 year and can include short-term debt such as bridge financing and lines of credit, assuming it is directly related to CIP additions.

It is important to note that, DOLP cannot exceed net PPE.

 

Property, Plant and Equipment (PPE)

PPE is not quite as confusing as debt, but it can still create some questions. To properly reflect depreciation expense, and other activity, in the proper “buckets” each year, some sort of tracking of pre-implementation and post-implementation assets will be required. Since the PPE and DOLP are so closely interrelated, the PPE should be determined first.

A poll taken during the session revealed that 72% of attendees have not begun tracking pre and post-implementation assets.

Classification of Certain Non-Operating State of Activities Items

Both the primary reserve ratio and the net income ratio require consideration of non-operating statements of activities items. Non-operating items that are increasing net assets, without donor restrictions, should be included in the denominator as part of total revenue in the net income ratio. Conversely, non-operating items that are decreasing net assets, without donor restrictions, should be included as part of expenses and losses in the primary reserve ratio. While not absolute, these characterizations will generally apply in most, but not necessarily all instances.

John ended his session by emphasizing that disclosures and FRSS will likely continue to evolve and he encourages everyone to use the resources available to them; NACUBO, their audit firm, peer networks and Brown Edwards to guide them in the right direction.

 

Session 3: COVID-19 Impacts to the Accreditation Process

Presenter: Donna Barrett, Director of Institutional Finance, SACSCOC

Donna Barrett, the Director of Institutional Finance for the Southern Association of Colleges and Schools, Commission on Colleges (SACSCOC), spoke to attendees about impacts to the accreditation process caused by COVID-19.

 

Who is SACSCOC?

The Southern Association of Colleges and Schools Commission on Colleges (SACSCOC), established in 1895, is the regional body for the accreditation of degree-granting higher education institutions in the Southern states. It serves as the common denominator of shared values and practices among the diverse institutions in Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia and Latin America and other international sites approved by the SACSCOC Board of Trustees that award associate, baccalaureate, master’s, or doctoral degrees. The Commission also accepts applications from other international institutions of higher education.

The mission of the SACSCOC is to assure the educational quality and improve the effectiveness of its member institutions.

 
Why do you care?

The SACSCOC improves quality, assures public standards are met and serves as the gatekeeper for Title IV federal financial aid.

The College Delegate Assembly (CDA) includes one voting representative (the chief executive officer) from each accredited institution. It elects seventy-seven members to the SACSCOC Board of Trustees to guide the organization’s work and to implement the accreditation process.

You can visit the SACSCOC website to:

  • Find the Board of Trustee members for your state

  • Determine the status of an institution

  • Find your assigned SACSCOC staff member

 

What does SACSCOC want from you?

According to Donna, “It’s always something…and if it’s not one thing, it’s another”. The biggest items are the compliance certifications and the fifth-year follow-up report. The SACSCOC also includes off-campus instructional sites (OCIS), substantive change, news, complaints, USDOE issues and HCM.

Compliance Certifications need to be completed every ten years and require at least two years’ audits, including the most recent at due date.

A fifth-year follow-up report addresses an institution’s continued compliance with standards and requirements identified at the time of an institution’s last review. At a minimum, audits of federal and state aid are required.

Consider building a relationship with your institution’s accreditation liaison, President’s office and your Financial Aid Director. They may all get notifications you need to see in a timely manner.

 

But it’s a pandemic…

Although changes were made at the institutional level to accommodate the state of the pandemic, the SACSCOC guidelines must be upheld.

  • All on-site committees, that went virtual, must be made up in person.

  • The SACSCOC due dates and timelines remain unchanged (regardless of federal delays).

  • If you didn’t have an audit by the due date for an off-site, talk with your SACSCOC VP.

  • If you don’t have an audit for a report to the SACSCOC Board, talk with your SACSCOC VP and request an extension from the SACSCOC President.

Donna also busted a common myth that many attendees were surprised to learn.

If you get a letter from the USDOE, the SACSCOC also receives a copy of the letter. If the SACSCOC require any information from you, they will request it. Do NOT send anything to the SACSCOC that they did not specifically request.

Donna provided a few hints for success:

  1. Get audits quickly.

    1. Let your staff know.

    2. Let your auditor know.

    3. Do what you can ahead of time.

    4. Be honest about where your delays are.

    5. Correct any findings from previous year’s audit.

  2. Treat financial noncompliance at the off-site or the on-site with urgency.

  3. Don’t let a non-financial person edit (rewrite) your narratives.

  4. Base all narratives on audited numbers ONLY.

We want to thank each of the presenters for taking the time to share their knowledge and insights with us and all of the attendees who made time to attend our session. If you have additional questions, or are interested in learning more about services offered by Brown Edwards, please reach out to us.

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