April 17, 2025
Written by Sasha Pudelski, Director, Advocacy at AASA, The School Superintendents Association and member of the AESA advocacy team
On March 28, the Department informed SEAs that the Administration has canceled any prior approval for “late liquidation” of remaining funds from a variety of federal pandemic recovery funds, including American Rescue Plan Elementary and Secondary School Emergency Relief (ESSER and Homeless Children and Youth (HCY) funds.
The letter also states that SEAs can reapply for an extension “on an individual project specific basis” by explaining “(1) how a particular project’s extension is necessary to mitigate the effects of COVID on American students’ education, and (2) why the Department should exercise its discretion to grant your request.”
This action by the Department has been challenged by a group of 16 Democratic attorneys general along with Pennsylvania Gov. Josh Shapiro in a lawsuit last Thursday. Thursday’s lawsuit, led by New York Attorney General Letitia James, claims that McMahon’s sudden about-face terminating states’ access to the funds was an “arbitrary and capricious” violation of federal law, creating massive budget gaps for state education departments and local school districts.
Reporting suggests that as many as 41 states and DC stand to lose almost $3 billion in funding that was already obligated (mostly via contracts for services) but not yet liquidated (or reimbursed) as the now-cancelled extensions had allowed final payments to be made through early 2026. Some states including Mississippi and Kentucky have responded by asking Secretary McMahon to reconsider her decision. Meanwhile, a new portal to process the new project-by-project requests has reportedly launched, and some states are beginning to request these new extensions. It is not clear at this point how USED will treat the requests or how quickly agency staff can process them in the wake of the recent 50% reduction in force.