Maryland faces $418M ‘catastrophic' loss in pandemic-era relief funds

Yahoo

01-04-2025

State Superintendent Carey Wright, second from left, at a September news conference at the Maryland State Department of Education building. Board of Education President Joshua Michale, left, listens. (File photo by William J. Ford/Maryland Matters)
The U.S. Department of Education told states Friday that it was canceling previous approvals to spend down remaining COVID-19 recovery funds, a change that could mean $418 million to the Maryland Department of Education.
The change was announced in a letter from U.S. Education Secretary Linda McMahon that was dated Friday at 5 p.m., and said the decision to cancel the pandemic funding was effective — Friday at 5 p.m.
'Shock does not begin to describe our reaction when we received the notification late Friday evening,' Maryland State Superintendent Carey Wright said Monday. 'This jeopardizes over $400 million in funding.'
Wright called the federal agency's decision 'catastrophic,' nothing that the money has already been spent or at least committed to the state's 24 school systems. She said the money is being used for tutoring, reading materials, after-school programming, even some construction projects such as repairs for heating and air conditioning units, among others.
State officials said about $305.2 million has already been spent but not reimbursed by the federal department. Another $112.8 million is in 'encumbered' funds not paid out by the state, which means school systems must immediately stop any ongoing work on capital projects, or educational programs.
'It may be a tutoring program that's going on right now in schools that was intended to go through this school year, or it might be an improvement to a health room in a school,' said state Board of Education President Joshua Michael. 'There's going to be significant disruption.'
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Officials said it remains unclear if the state would need to cover costs for ongoing programs, or if the local school systems may have to return any money already spent.
'The federal government is breaking the trust that it has once held strong with states across America,' Michael said.
School officials said they are consulting with the Office of the Attorney General on the possibility of filing suit against the federal department.
'I think it's fair to say that we are exploring all legal options at this time given the severity of this action,' Michael said.
He said the majority of the money comes from the American Rescue Plan's Elementary and Secondary School Emergency Relief, or ARP ESSER, program.
The state last year requested and received approval for an extension on how it would draw down the ESSER funds it had left over. Wright said the state sought extensions because of supply chain issues and construction delays.
The approval was given before a Jan. 28 deadline set by former President Joe Biden (D) before he left office that month. But in her letter Friday, McMahon dismissed the approvals by the previous administration.
'The extension approval was issued recently, so any reliance interests developed are minimal,' McMahon wrote. 'Moreover, an agency may reconsider its prior decision. So you could not rely on the Department adhering to its original decision. That is especially true because the extension was a matter of administrative grace.'
She said that extending deadlines to allocate 'COVID-related grants … years after the COVID pandemic ended is not consistent with the Department's priorities and thus not a worthwhile exercise of its discretion.'
But McMahon also wrote the department would reconsider funding for states if the could explain 'how a particular project's extension is necessary to mitigate the effects of COVID on American students' education, and why the Department should exercise its discretion to grant your request.'
Wright said ending the program at 5 p.m. Friday and offering to consider appeals from states 'seemed to be contradictory,' but she said her department plans to send a letter to justify why money for Maryland is necessary.
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A U.S. department spokesperson said that specific projects would be assessed if funds are used directly to mitigate the effects of COVID-19.
'COVID is over. States and school districts can no longer claim they are spending their emergency pandemic funds on 'COVID relief' when there are numerous documented examples of misuse,' said Madi Biedermann in a statement Monday afternoon.
'The Biden Administration established an irresponsible precedent by extending the deadline for spending the COVID money far beyond the intended purpose of the funds, and it is past time for the money to be returned to the people's bank account,' Biedermann's statement said.
In part because of the Education Department's decision, the Maryland Senate approved an amendment to a budget bill Monday that would require the governor's budget team to track federal cuts and, if they hit $1 billion, recommend state spending cuts to the General Assembly's Legislative Policy Committee.
'If we have a $1 billion problem from combined actions by the federal government, we would begin a process of review through our policy committee, and work with the governor to come up with solutions,' said Sen. Guy Guzzone (D-Howard), chair of the Budget and Taxation Committee. 'We have to be wide-eyed open about what could be happening because it is happening.'
Sen. Chris West (R-Baltimore and Carroll) asked if any recommendations that may come from the policy committee would be for the legislature next year.
'Could very well be,' Guzzone said.