Department Of Education Takes Back Billions In Funds Recently Promised To State School Systems
All states are affected, leaving school systems with bills up to $254,000,000.
Secretary of Education Linda McMahon informed states last Friday that money many had been counting on for the coming year was — after a whiplash back and forth — no longer on the table. Shortly after wide scale shutdowns in mid-March of 2020, Congress established the Elementary and Secondary School Emergency Relief (ESSER) Fund, which provided state-level grants to provide schools with emergency relief funds to address the impact of the pandemic. As of February 2025, approximately $4.4 billion of $201.3 billion remained unspent.
Though these reserves were initially meant to be liquidated by January 28, 2025, the Education Department (ED) approved extensions for 41 states this February. Affected states were assured that while reimbursement processes would be different moving forward, they would have access to those funds — approximately $3 billion all together — until March 28, 2026. And now, just weeks after giving approval, McMahon informed states that ED had reversed course, leaving some states responsible for millions and even hundreds of millions of dollars in contracts and bills.
“After careful review,” McMahon wrote in a letter to state chiefs of education, “the Department is modifying the liquidation period to end on March 28, 2025. The Department has concluded that the further extension of the liquidation period for the aforementioned grants, already well past the period of performance, was not justified. ... The Department’s initial approval of your extension request does not change anything.”
But many states had either entered contracts to spend those funds, relied on them in budgets established months ago, or had already spent the money with the promise of reimbursement.
The effect on states ranges considerably — from just $18,000 in Hawaii to more than $250 million in Pennsylvania — but even the 10 least affected states average $2.81 million in lost funds. The most affected states average $170.3 million
ESSER funds had up until March 28 been used for a wide array of programs, from mental health support in Massachusetts to tutoring and remedial services in Connecticut, nursing services in Tennessee to homeless services in Illinois.
McMahon’s letter does offer a sliver of hope; she included a provision that ED will consider extensions on “individual, project specific basis.”
In other words: if a project aligns with ED and administration goals, states might have access to erstwhile promised funds.
