On March 28, 2025, the U.S. Department of Education Secretary announced in a rescission letter to the state chiefs of education that the department ended the liquidation period for programs under the Education Stabilization Fund (ESF), Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act of 2021, and American Rescue Plan (ARP) effective March 28, 2025. The letter from the Secretary of Education stated the following:
“Under 2 CFR § 200.344(c), a federal award recipient must liquidate all obligations no later than 120 calendar days after the conclusion of the award. A federal agency ‘may approve extensions’ if the agency, in its discretion, finds that such an extension is ‘justified.’ Id. Here, the period to liquidate obligations for these Grant Awards expired. In response to a liquidation extension request, the Department of Education previously granted a discretionary extension of the period of liquidation. But the Department has reconsidered your request.”
The letter goes on to advise that the U.S. Department of Education will consider extensions to the liquidation period on a case-by-case basis. State education agencies interested in an extension for impacted funds can email ESSERF@ed.gov to request an extension. In response to the March 28, 2025 rescission letter, 16 states and the District of Columbia filed a lawsuit against the U.S. Department of Education on April 10, 2025 in U.S. District Court for the Southern District of New York. The lawsuit alleges that the U.S. Department of Education’s action:
“… deprives Plaintiffs and their local school districts of the period of the approved extensions (through March 2026) to access hundreds of millions of dollars in critical education stabilization funding—funds on which Plaintiffs’ and their local school districts’ budgets depend. If the previously approved extensions are not restored, Plaintiffs will be unable to provide essential public education services for residents, pay direct student service providers and teachers, satisfy obligations to public and private partners, and carry on the important business of government to educate their residents’ children.”
The plaintiffs are seeking that the court declare that the rescission letter violates the Administrative Procedure Act and reinstate the extension period previously approved by the U.S. Department of Education.
Our team is monitoring the legal process and is available to assist impacted entities with funding questions and next steps. If you have any questions or need assistance, please reach out to a professional at Forvis Mazars.