Round 2 of Paycheck Protection Program opens on January 11th

Dear CMO and School Leaders,

As many of you know, we anticipate financial relief for schools this year as part of the recent Consolidated Appropriations Act of 2021 (CAA), which includes $900 billion for COVID-19 relief. We want to share the information we have so far, but we know that more details will emerge in the weeks to come as the Act is put into place.

The Context: Schools Need Support

We know that the potential for relief comes at a critical time for your schools. In November, NOLA-PS projected that, due to the impact of COVID-19, schools may see an average decline in funding of up to $1,500 per pupil compared to this school year, including negative deferred revenues.

This would be in addition to any potential negative deferred revenues from the current year, which are currently projected to be an average of $50 per pupil (final figures are still pending the completion of OPSB’s audit).

Paycheck Protection Program (PPP) Round 2 opens Monday, January 11th

The CAA also included funding for a second round of the Paycheck Protection Program (PPP),  and charter schools again may be eligible to apply for a first-time PPP loan, or a second PPP loan. Last week, the Small Business Administration announced the timeline for this new round of loans.
January 11th: Community financial institutions will be able to make loans to new or “first draw” borrowers (those who did not receive a PPP loan in the first round) and certain existing or “second draw” PPP borrowers (see below).January 13th: Community financial institutions will be able to make loans to existing/second draw borrowers.Shortly thereafter, all participating lenders will be able to make PPP loans.In general, the PPP loan will be an amount up to 2.5 times your average monthly payroll costs (up to $100,000 per employee) in 2019 or 2020.As with the first round of PPP, the loan will be forgiven if it is used on eligible expenses. In addition to the categories covered by the first round (payroll, rent, covered mortgage interest, and utilities), this round of PPP expands eligible expenses to include Covid-19 related facility modifications and purchases of worker protection (like PPE), essential supplies, and business software or cloud computing services. To receive forgiveness, PPP borrowers must spend 60% or more of the loan on payroll specifically over a period of 8 – 24 weeks.Loans will be made on a first-come, first-serve basis, so we recommend you reach out to your bank or financial institution as soon as possible to receive more information on how to begin the PPP application process.
New/First Draw BorrowersIf your non-profit charter organization did not receive a PPP loan in 2019, you may be eligible to apply for the PPP if your charter organization employs 500 or fewer employees. For more detailed information on rules applicable to first draw borrowers, consult the Small Business Administration’s Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act.Existing/Second Draw BorrowersIf your non-profit charter organization received a PPP loan last year, you may be eligible to apply for a second draw loan if your charter organization:Employs 300 or fewer employees;Used or will use the full amount of their first PPP loan on eligible expenses on or before the expected date for the second PPP loan disbursement; andCan demonstrate a revenue reduction of 25% or more in all or part of 2020, compared with all or part of 2019. This is calculated by: 1) comparing gross receipts in any 2020 quarter with an applicable quarter in 2019, or 2) showing copies of your organization’s annual tax forms that show a reduction in annual receipts of 25% or greater in 2020, compared with 2019.Second draw loans are limited to a maximum of $2 million per organization. For more detailed information on rules applicable to second draw borrowers, consult the Small Business Administration’s Interim Final Rule on Second Draw PPP Loans.

Direct Aid to Schools

The CAA allocates $54 billion to support schools to address COVID-19-related learning loss. Most of this will go straight to schools. Approximately 90% will be sent to LEAs directly, according to Title 1 allocations. Another 9.5% will be available to state agencies for discretionary use to provide additional support to schools; the remaining 0.5% may be used by states on administrative costs.

In the prior CARES Act allocations, New Orleans public schools collectively received approximately $27 million from the Elementary and Secondary School Emergency Relief Fund (ESSER). This new round of “ESSER II” support will approximately quadruple that.

For example, if your school received approximately $250,000 in ESSER funds last time, you may expect $1 million in ESSER II funds through this allocation.

The exact allocations schools will receive are directly related to their Title 1 allocations. Citywide, the estimated average impact per pupil in New Orleans will be $2,350. For some schools, in the near-term, this may help mitigate the effect on school funding of the anticipated downturn in local revenues. Nevertheless, the economic impact of COVID-19 may have long-term impacts to typical local and state funding and school expenses, which could be felt years down the line.

The Louisiana Department of Education (LDE) has not yet communicated the timeline or process for the distribution of these funds. Allocations must be approved by the State Board of Elementary and Secondary Education (BESE) before distribution, and BESE does not currently have a meeting scheduled until March. Schools have until September 2022 to spend their original ESSER allocations, and until September 2023 to spend their ESSER II allocations.

Potential Aid for Schools – GEER

Similar to the support your schools received through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, there is also another round of allocations made to states through the Governor’s Emergency Education Relief Fund (GEER). These funds will total $4 billion.

Of that amount, $2.75 billion will go towards nonpublic schools, and governors will have discretion over the remaining $1.3 billion. Unlike the increased ESSER allocations, the CAA’s GEER allocations will be less than half of the prior funding allocated through the CARES Act.

It is estimated that a total of $22 million will be allocated to Louisiana through GEER. Governor Edwards has flexibility to use these funds to provide aid across a wide range of education needs, including early childhood, K-12, and higher education. In the prior round of GEER funding, some of Louisiana’s funding was allocated to address K-12 technology needs across the state.

Other Supports

A number of other supports are also available that may be relevant for schools.

  • Early childhood: $10 billion was allocated towards child care, which will be distributed through the Child Care & Development Block Grant (CDBG). This may result in funding opportunities for schools locally, and we will know more about this at a later time.
  • Internet access: While we anticipated inclusion of a provision that would expand use of E-rate to cover in-home internet service, that did not make it into the final package.  $3 billion, however, was allocated towards a new Emergency Broadband Benefit Program. This will be implemented through the FCC and may provide up to $50/month discounts for at-home internet access for families whose students qualify for free/reduced lunch during the period of the pandemic (and up to 6 months after).
  • Postsecondary: Approximately $300 million is anticipated to provide support to Louisiana’s higher education system, of which 50% will provide direct student financial aid. Also of note is “2nd Chance Pell,” which would allow individuals who are incarcerated to access federal financial student aid.
  • Family SNAP benefits: The maximum allocation for families may increase up to 15% through June 2021.
  • Other general national funding increases: In addition to the above, the CAA provides for approximately 1% more in funding to Title 1 and IDEA, as well as a 7.5% increase for childcare funding.

Additional Information Resources

We know this is a great deal of information to digest, but we have heard from many of you that it is helpful to have summaries of these complex funding issues at the ready. You are carrying and leading so much, so we will continue to do what we can to get you the information you need.Do not hesitate to reach out with questions or ideas. If there are additional ways we can support you in these difficult times, we want to know.
Sincerely,Patrick Dobard
New Schools for New Orleans