Ed Dept offers 18-month extension requests for ARP spending

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Dive brief:

  • The US Department of Education will consider requests from school districts for an 18-month extension on spending COVID-19 emergency funds under the American Rescue Plan beyond the Sept. 30, 2024, obligation deadline, according to a May 13 letter from the department to AASA, The School Superintendents Association.
  • The two-page letter said that while the obligation deadline — when a district commits to use of certain funds — is based on statutory and regulatory requirements, the department can approve spending extension requests for properly obligated funds. Approvals would be based on specific facts and circumstances, and longer extensions may be considered for “extraordinary circumstances.”
  • School system officials and education advocacy groups, such as AASA, have raised concerns that a tight spending timeline for ARP — plus other circumstances such as supply chain challengesinflation and labor shortages — make it harder for districts to use ARP funds for needed facility improvements.

Dive Insight:

Daniel Domenech, executive director of AASA, said in a statement the organization is “thrilled” with the clarity the department provided to the timeline school systems have to complete “desperately needed” school facilities projects and HVAC upgrades.

“Given inflation, supply chain issues and labor shortages, we know that districts want to invest these funds wisely, and the knowledge that they have 18 additional months to liquidate funding will hopefully provide them with the assurance needed to move forward with using ARP funds for these contracts and obligations,” Domenech said.

Spending extension requests will be filed by state education agencies on behalf of districts. A blog post on the AASA website said the organization is confident state education agencies “will not hesitate to apply for this additional spending runway and the process for them to do so is a familiar and straightforward one.”

In January, AASA and 31 other education, health, environmental, labor and industry organizations asked the department for Flexibility with the spending deadline. In a letter, they said it would be “nearly impossible” for districts to meet the deadline given the logistical and staffing challenges.

Some school districts are spending significant amounts of their ESSER funds on facility upgrades, such as new HVAC systems, repairs and renovations. These facility improvements are often filling needs that existed in school systems long before the pandemic, said district officials in interviews about spending priorities for emergency funding.

A 2021 report from the 21st Century School Fund, the International Well Building Institute and the National Council on School Facilities found the US was underinvesting in school buildings and grounds by $85 billion each year.

A Government Accountability Office report in 2020 said 41% of districts required HVAC systems upgrades or replacements at least helped their schools. The GAO study also discovered that, of 55 schools visited in six states, helped described HVAC-related problems in their buildings, including older systems that leaked and damaged flooring or ceiling tiles.

According to an analysis by FutureEd at Georgetown Universityusing information manually collected by data firm Burbio through April 19, a sample set of spending plans from 4,155 school districts shows more than half planned to use ESSER funds on HVAC systems.

Such expenditures can range from purchasing improved air filters for existing units or replacing systems that fail to heat or cool schools, FutureEd wrote on its website.

The inability to meet spending deadlines was one of the biggest challenges school district finance leaders face regarding the management of federal relief funding, according to a survey conducted by the Association of School Business Officials International, released this week.

The ASBO survey results included responses from finance leaders at 154 school districts across 35 states.

When asked about how districts have spent ESSER money on facilities, the most popular expenses within that category were investments to repair, replace, or upgrade HVAC systems (47%) and to provide safer drinking water for students (28%). ASBO noted that 30% of districts said they haven’t spent any ESSER funds on facilities, which was the second-highest answer after HVAC repairs, replacements, and upgrades.

The tight timelines are particularly worrisome for smaller, rural school districts that may not have as much choice in contractors or materials or flexibility with revenues, or are limited in staff time needed to manage improvement projects. Competition between surrounding school systems in finding and contracting with project managers or companies is another concern as many school systems may consider facility upgrades at the same time.

Friday’s letter from the Education Department, addressed to Domenech and written by Roberto Rodriguez, assistant secretary in the Office of Planning, Evaluation and Policy Development, said the department discourages districts from using emergency funds on new construction because that may limit a district’s ability to spend on “other more pressure needs related to the impact of the pandemic,” such as learning and the emotional and mental health of children.

Rodriguez did write that school infrastructure projects related to addressing the impacts of the pandemic are generally an allowable use of funds. He said the department is pleased that many districts are using ARP money to upgrade indoor air quality.

In his statement, Domenech said AASA will continue to advocate to Congress for an extension to the Sept. 30, 2024, obligation deadline for ARP funding.

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