Dive Brief:
- Sixteen states and the District of Columbia sued the U.S. Department of Education on Thursday for halting previously approved extended spending timelines for emergency pandemic funding, calling the department's action "tremendously harmful" to states, school districts, private schools and contractors.
- The lawsuit, filed in U.S. District Court for the Southern District of New York, called the action “arbitrary and capricious" and said it violated the Administrative Procedure Act. The plaintiffs are seeking an order requiring the Education Department to honor the spending extensions.
- The policy pivot is causing states and districts to cancel tutoring services, facility improvement projects, reading interventions, after-school programming and more. District and school staff layoffs are likely if the federal government does not make reimbursement payments, the lawsuit said.
Dive Insight:
The Education Department's March 28 letter canceling the extensions, sent at 5:03 p.m. on a Friday, has "already caused substantial confusion" and financial upheaval regarding late liquidation for Elementary and Secondary School Emergency Relief funds, the plaintiffs said.
States, districts, private schools and contractors have already created budgets, hired staff, offered services to families and children and developed operating plans based on pre-approved spending extensions, according to their lawsuit.
In Arizona, for example, a school district on the Navajo reservation will likely need to lay off teachers and staff to cover costs that were supposed to be paid for by American Rescue Plan-ESSER dollars. That money had been pre-approved by the Education Department for a tutoring service for reading and math instruction and to repair aging buildings. After the Education Department rescinded the spending extensions, the tutoring service and infrastructure project were terminated, the lawsuit said.
The Education Department's one-page March 28 letter, signed by U.S. Secretary of Education Linda McMahon, did offer states an opportunity to continue to extend spending by reapplying for Education Department approvals on a per-contract basis. But McMahon's letter also said the spending extensions were "not consistent with the Department’s priorities" and that states had failed to meet spending deadlines set out in federal regulations.
While spending deadlines for all three congressionally approved allocations for K-12 COVID-19 recovery have expired, the Education Department under the Biden administration allowed for a longer spending runway, giving states and districts an extra 14 months to spend down the funds.
For instance, the spending deadline for ARP-ESSER was Jan. 28, but the late liquidation deadline is March 30, 2026. For funds under the Coronavirus Response and Relief Supplemental Appropriations Act, the original spending deadline was Jan. 29, 2024, but the extended spending deadline was March 28. The spending extension for the Coronavirus Aid, Relief, and Economic Security Act was March 28, 2024.
In late February, the Education Department told K-12 Dive that about $2.5 billion out of a total $121.9 billion in ARP-ESSER funds remained to be spent by districts in the 41 states, Puerto Rico and the District of Columbia that had received extensions. About $433 million was left to be spent by states under ARP’s Emergency Assistance to Non-Public Schools allocation.
The lawsuit says several states received approvals from the Education Department for ESSER spending extensions after President Donald Trump's inauguration on Jan. 20. For example, Illinois said the Education Department approved its request on Jan. 22 to extend spending under ARP-ESSER. The state said it still has $77.2 million left to spend in federal COVID funds for education.
One state — Oregon — said it submitted a request for late liquidation of EANS funds at 5:02 p.m. on March 28, or one minute before the Education Department letter went out. The state has not received a response.
Pennsylvania submitted a spending extension request for EANS funds on Feb. 10 but the Education Department has not responded to the state's "repeated requests,” according to the lawsuit. About a month earlier, on Jan. 8, the department did grant Pennsylvania an extension for ESSER funds targeting supports for homeless children and youth.
While there was no hard deadline for states to make late liquidation requests, January 2024 guidance from the Education Department recommended submissions be made prior to Dec. 31, 2024, for ARP funds so there would be minimal disruption to accessing funds.
Democratic lawmakers in Congress are also calling for the Education Department to reverse its cancellation of ESSER spending extensions, saying the department changed the rules abruptly and has no recognition of the lasting impacts of the pandemic on students and schools.
Maryland's Attorney General Anthony Brown, in a Thursday statement, said, "The Trump Administration’s decision to cut this funding has thrown Maryland schools into turmoil and uncertainty and threatens valuable programs that help homeless and low-income students recover from the painful effects of the COVID-19 pandemic.”
He added, “This is a breathtakingly heartless action that threatens to change children’s futures for the worse, and our Office will not stand for it.”
Thursday's lawsuit was filed by Pennsylvania Gov. Josh Shapiro, a Democrat, and the mostly Democratic state attorneys general of Arizona, California, Delaware, the District of Columbia, Hawaii, Illinois, Maryland, Massachusetts, Maine, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York and Oregon. All the attorneys general are Democratic, except Hawaii's, whose office is nonpartisan.
