Education Funding Explainer

How Can Districts Get More Time to Spend ESSER Dollars? An Explainer

By Mark Lieberman — April 11, 2024 4 min read
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Time is running out for school districts to spend their remaining federal COVID-relief dollars—unless districts successfully get approval to take a little longer.

Districts must still commit all their funds from the last, and largest, round of aid to specific expenses by Sept. 30. Under current law, they have an additional five months to “liquidate,” or spend, that money—transferring it from a district account to a vendor or employee by Jan. 31, 2025 for work completed before October 2024.

For each of the three rounds of pandemic-relief, or ESSER, funding from the federal government, the U.S. Department of Education has also opened an opportunity for “late liquidation” of up to 14 additional months beyond the original deadline.

Districts permitted to liquidate the last round of relief aid late could spend remaining ESSER funds as late as May 2026. They need to start preparing now for that possibility if they haven’t already, said Julia Martin, the legislative director for Brustein & Manasevit, a Washington law firm focused on education.

“It seems to be in [the federal department]’s interest to approve many of these extensions and maximize the impact of the funds, as well as the percentage spent,” Martin said. “But districts have to help them make that argument.”

Organizations that represent school superintendents have pushed for a broader deadline extension that gives districts more flexibility to wrap up their ESSER spending. But Congress is virtually guaranteed not to take up that request.

In the meantime, “late liquidation” offers a limited opportunity for districts to keep ESSER in the mix a little while longer. Here’s how it works.

Which expenses qualify for an extension?

The opportunity to spend ESSER funds past the deadline only applies to expenses tied to contracts. In a January 2024 letter, department officials emphasized support for continued investments in “increasing daily student attendance; providing high-quality tutoring; and increasing access to [before- and after-school learning] and summer learning and extended learning time.”

Teacher salaries, recruitment bonuses, and bulk purchases of laptops or textbooks are examples of expenses that are not eligible for extension.

How will a liquidation extension help?

It will give districts more time to spend money for a contract that extends past Jan. 31, 2025. That means they could keep a mental health service provider, a tutoring partner, or a construction company around for the remainder of the current school year and into the next one.

It will not, however, give districts more time to decide how to allocate their remaining dollars. Those decisions must be final as of Sept. 30.

Otherwise, districts will have to send their unallocated funds back to the U.S. Treasury.

How can districts get an extension?

Districts need to supply their respective state education departments with detailed information about the amount of money they need more time to spend, the necessary expenses, the justification for the proposed extension, and the plan for ensuring that the district spends the money in the correct time frame.

Then it’s the state’s responsibility to compile that information into a spreadsheet linked in this guide from the Council of Chief State School Officers. The state education department can also request an extension for the ESSER funds it received—10 percent of the state’s overall allocation from the federal government.

See Also

Illustration of a piggy bank with falling clocks entering the bank.

Some states—like Connecticut and New Hampshire—have already publicly posted detailed rules and expectations for districts seeking late liquidation requests.

Many others don’t appear to have anything on their ESSER web pages referring to late liquidation. Districts in those states will have to contact their education departments directly for more information.

What is the deadline to apply for an extension?

States can request an extension between now and Dec. 31, 2024—three months after the deadline to commit the funds and less than a month before the current deadline to liquidate them.

It remains to be seen how quickly the Education Department will process extension requests that come in close to the deadline.

As of April 11, no states have submitted applications for late liquidation of ESSER III dollars on behalf of districts, said Vanessa Harmoush, a spokesperson for the Education Department.

What happened with extensions for ESSER I and ESSER II?

The department granted every request from states that applied on behalf of districts for a liquidation extension for ESSER I and ESSER II, Harmoush said. No applications were rejected.

The department granted late liquidation for ESSER I to 10 states, Harmoush said: Connecticut, Illinois, Indiana, Mississippi, Nevada, North Carolina, Ohio, Pennsylvania, Texas, and Wisconsin. Puerto Rico and the District of Columbia also received extensions.

For ESSER II, 19 states along with Puerto Rico got extensions: Arkansas, California, Connecticut, Delaware, Florida, Illinois, Indiana, Kentucky, Massachusetts, Missouri, New Jersey, New Mexico, New York, North Carolina, Ohio, Rhode Island, South Carolina, Texas, and Vermont.

Does a deadline extension cover the staffing necessary to manage the grant until it’s completed?

No. Staff salaries are not eligible for late liquidation requests. That means the school district employee responsible for managing the grant must be compensated with funds other than ESSER dollars—even if they’re helping manage a contract funded by ESSER.

Can districts shift ESSER dollars to another expense if a contractor pulls out after the late liquidation period begins?

No. The obligation deadline stands firm on Sept. 30. If a district receives approval to take additional months to liquidate funds for a particular contract, and that contract falls apart for whatever reason, the district can no longer use the funds that were set aside for that purpose.

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