Less than three months after the U.S. Education Department abruptly froze the several billion dollars in pandemic relief funds schools and states had a year left to spend, the agency has restored the original spending deadline, effectively unfreezing the funds nationwide.
As of Thursday, all state education agencies and school districts have until March 2026 to spend remaining pandemic relief dollars—the same deadline they had before the Trump administration changed the policy. Before this announcement, a judge had ordered that states suing the department could continue spending their funds, while those that didn’t sue were restricted.
Education Secretary Linda McMahon informed states of the change in a letter sent at 6:45 p.m. on June 26, along with an accompanying FAQ document. The department decided that it wasn’t fair for states that didn’t sue to face a different policy than the ones who had sued and secured temporary relief, McMahon wrote.
“The original intent of the policy announced on March 28 was to treat all states consistently with regards to safeguarding and refocusing their remaining COVID-era grant funding on students,” she wrote. “The ongoing litigation has created basic fairness and uniformity problems.”
McMahon’s letter leaves open the possibility of yanking the extended deadline yet again, if the litigation eventually goes in the department’s favor. But, she wrote, “unless and until the Department is allowed to uniformly apply the policy described in the March 28 letter to all states,” the cancellation she announced then is not in effect.
Until now, only the District of Columbia and the following 16 states had benefited from court rulings temporarily halting the department’s deadline change: Arizona, California, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, Nevada, New Mexico, New York, Oregon, and Pennsylvania.
States and districts that have money remaining would be wise to spend it as quickly as possible “so they don’t have to manage another shift in policy,” said Julia Martin, the director of policy and government affairs for the Bruman Group, an education law firm that represents states and school districts.
McMahon, in her letter, also leaves open the possibility of requesting additional documentation or rejecting reimbursement requests for “late liquidation” (spending funds past the original deadline) that were already approved.
“We will carefully review requests in order to ensure they continue to adhere to governmentwide grant cost principles and that, broadly, expenditures are intended to ‘prepare, prevent, and respond to coronavirus,’” McMahon wrote.
Disrupted timelines for pandemic funding led to canceled services and laid-off workers
The Trump administration’s latest decision on pandemic-era funding for schools marks yet another dramatic turn in a saga that has prompted numerous periods of logistical upheaval for schools and states in recent months.
Congress sent schools roughly $200 billion in three rounds of pandemic relief aid between March 2020 and March 2021. Funding for three programs awarded during the Biden administration—ESSER III for public schools; a grant program for supporting homeless students; and one for private schools—was due to be fully spent by January 2025.
As the spending periods for those grants approached, the department granted permission to states, and by extension districts, to “liquidate” or spend remaining dollars for 15 months past the original deadline. Schools sought those exceptions so they could have more time to pay down fees for contracted services, ranging from construction and maintenance to tutoring and technology.
But on March 28, McMahon wrote to states that the department had essentially wiped out those deadline extensions, effective immediately.
The 16 Democrat-led states and D.C. sued the department on April 11, arguing that the administration had illegally plunged them into financial chaos that would cut into services for students.
A series of court orders in May and June resulted in the original funding deadline being restored temporarily for plaintiffs as the lawsuit continues to play out.
The remaining states, meanwhile, have had the option to seek relief from the Department of Education for individual projects. But the department has rejected a large volume of those requests, including virtually all facilities projects and teacher-training efforts.
All told, the progression of events over the last months has likely resulted in fewer pandemic dollars being spent than would have otherwise, Martin said. Some districts and states canceled initiatives or laid off staff members in early April.
“As the school year has finished and summer activities are well underway, providers and parents are unlikely to pivot yet again,” Martin said. “Because no new contracts can be signed, there are some cases where the funds simply will not be spent, and students will not get the services planned.”
