The U.S. Department of Education clarified Monday that districts and states can, in some situations, continue activities funded by American Rescue Plan emergency aid past the obligation and liquidation period.
"The question of whether services may extend a reasonable time beyond the obligation and liquidation period is fact-specific and should be considered by the State on a case-by-case basis," the department said in a June 26 guidance document.
For example, a multi-year software licensing contract that extends "for some time" beyond the liquidation period may be an acceptable situation, according to the guidance.
"The LEA in that instance should document, at the time it enters into the contract, its analysis leading to the decision to enter into the multi-year contract," the department said. Factors documented by school districts to support services extending beyond the liquidation date could include cost differences in shorter versus longer contracts and local and state procurement rules allowing long-term contracts.
It's still possible for the department to decide that programs continuing beyond obligation and liquidation periods weren't necessary for various reasons. Those instances may include if the length of the service was unreasonable, the cost was unnecessary, or there was a lack of documentation supporting the decision.
However, the department clarified that services cannot, in any situation, extend beyond the date unused funds must be returned to the U.S. Department of Treasury — which is four years after obligation deadlines.
The guidance document was released in response to states' concerns of possible audits if they or their school districts use funds past the deadlines from the Elementary and Secondary School Emergency Relief.
In May 2022, the department said it would consider school districts' requests to extend some ARP COVID-19 emergency funding by 18 months, to March 2026.
At the time, public education advocates and policy experts pushed for the department to provide more detailed guidance for ARP spending deadlines — in addition to the extensions it allowed in May 2022 for school infrastructure projects.
Education advocacy groups also asked the department to extend ARP ESSER III funds even further, to December 2026.
Spending timelines for ARP have stressed educators and advocates, considering the federal aid in that package is the largest and last of the three ESSER spending pots.
“Without this guidance, the goal of ensuring expeditious and wise federal investments that will accelerate student learning and address longstanding educational inequities in our education system will be increasingly impossible,” AASA, The School Superintendents Association, said in a statement last year.
The department said in a statement to K-12 Dive that any communication related to ARP liquidation extensions will be communicated to states and districts prior to the current ARP Act obligation deadline, which is September 2024. It's unclear when potential ARP late liquidation requests will be approved.
However, late liquidation guidance released in September 2022 also allowed spending extensions for states and districts upon requests for the Coronavirus Aid, Relief, and Economic Security (CARES) Act — the first pot of ESSER funding. Some of those applications were approved in March of this year for seven states and the District of Columbia.
A department spokesperson said the federal agency "is committed to providing a prompt review of liquidation extension requests," and is still accepting liquidation extensions for ESSER I and II.
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