The U.S. Department of Education reversed course Thursday on prior guidance that canceled spending extensions for federal K-12 pandemic relief funds. States that were preapproved for the extended spending deadlines can now request reimbursements and liquidate their funds.
In a letter to states not suing over the Education Department's withholding of the funds, U.S. Education Secretary Linda McMahon said the pending litigation "has created basic fairness and uniformity problems" among states. This situation concerns access to school district funds preapproved for extended spending deadlines under the Elementary and Secondary School Emergency Relief program and other COVID emergency aid programs for schools.
A May 6 preliminary injunction prevented the agency from canceling those reimbursements for the 16 Democratic-leaning states that, along with the District of Columbia, sued the Education Department for withholding the funds. Thus, they had been able to continue to draw down their ESSER funds. But the states not party to the litigation still could not. McMahon's letter clarifies that now, all states and outlying areas that were preapproved for late liquidation prior to March 28 can do so.
The secretary, however, noted that all late liquidation funding requests will be carefully reviewed to ensure they relate to pandemic recovery efforts. She also indicated the agency's desire to reinstate a March 28 policy change that withheld funds for late liquidation until states reapplied and were approved for reimbursements. The final policy will depend on court decisions.
Noelle Ellerson Ng, associate executive director of advocacy and governance for AASA, the School Superintendents Association, labeled the move a "win" for school districts.
Local and state education leaders had called the Education Department's earlier cancellation harmful for public and private schools and contractors. In its lawsuit against the Education Department, the 16 states and D.C. said the cancellation was abrupt and had led schools to pause tutoring services, reading interventions, after-school programming, facility upgrades and more. They also worried about potential layoffs for district and school staff if the funds could not be recovered.
The Education Department said at the time it was holding back the preapproved funding because it was not consistent with the agency’s priorities. The agency also said states had failed to meet spending deadlines set out in federal regulations.
The regular spending deadline for American Rescue Plan funds — the last and largest of the ESSER allocations approved by Congress — was Jan. 28. The late liquidation deadline is March 30, 2026.
When announcing the cancellation in March, the Education Department did invite states to reapply for late liquidation approvals. The department has not responded to requests for details about how many states reapplied or were approved to access those funds.
On a webpage dedicated to the late liquidation process, the Education Department said it had received over 675 project-specific requests from 34 states and outlying areas as of Thursday. Of those, the agency had reviewed and issued determinations for over 500 project-specific requests from 28 states and outlying areas.
The Education Department also released a FAQ about late liquidation for ESSER and other COVID emergency aid programs for schools.
