ESSER Liquidation Update

April 15, 2025

UPDATE 5/12: In light of the May 6, 2025 ordered preliminary injunction (PI) in the New York litigation, ED has modified the ESF late liquidation deadline change at issue in the case (which includes ESSER) to be effective May 24, 2025 for the States that filed the lawsuit. The PI order expressly authorized the Department to “modify [ ] ED’s previously approved periods for Plaintiffs to liquidate their obligations under the ESF” by “providing notice to Plaintiffs at least fourteen (14) days prior to the effective date of such modification.” Therefore, the letter dated May 11th officially notifies the Plaintiff States that the Department is modifying the period to liquidate obligations under the ESF programs to terminate on May 24, 2025 and directs applicable States to use this 14-day notice period to wind down their existing obligations for work already completed.  The States that this new deadline applies to includes:  Arizona, California, the District of Columbia, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Nevada, Oregon, and Pennsylvania.

 
ED reiterated that a new late liquidation request is still available on a project-by-project basis. In order to apply, States must submit the following information for each project (e.g., each contract) for which they are seeking an extension: 
  1. State/Outlying Area 
  2. Grant Award Number 
  3. Entity requesting the extension (State entity or subrecipient name) 
  4. Name and short description of the project (e.g., contracted activity) 
  5. Vendor (if the request is to reimburse a specific contractor/vendor) 
  6. Requested timeframe for extension 
  7. Amount of funds requested for extension 
  8. A brief description of how a particular project’s extension is consistent with the authorizing statute(s) 
  9. A justification of why the Department should exercise its discretion to grant your request 
  10. Whether the particular project mitigates the educational effects of COVID and, if so, how 
  11. An assurance that the funds were properly obligated no later than September 30, 2024. 


UPDATE 5/6Today a New York District Court ruled in favor of the 17 states that challenged ED’s changed ESSER’s changed liquidation policy.  Specifically, ED is preliminary enjoined from enforcing or implementing the March 28th guidance that rescinded the prior approvals granted by the U.S. Department of Education extending the periods of time for Plaintiffs to liquidate their funding. 

UPDATE 4/29
:  Last week, ED rolled out on how States can apply for additional time to draw down ESSER funding including the opportunity to appeal denials for additional time. 

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On 3/28/25, 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. 

suggests that as many as 41 states and DC stand to lose 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 and 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.