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District warns ESSER denials and reimbursement timing could stall capital projects; vendors have unpaid invoices
Summary
District legal and finance staff said recent federal denials and changed appeals processes for ESSER reimbursements have created cash-flow stress on construction and equipment projects. Officials named Snyder and M Square among contractors with invoices pending and said a meeting with state attorneys and DPI is scheduled to discuss appeals.
District legal and finance counsel told the committee that changes at the U.S. Department of Education around how ESSER funds are reviewed and denied have created cash-flow and reimbursement problems that jeopardize ongoing capital projects.
Mister Schwartz, speaking about litigation and appeals, said the district and state are coordinating with attorneys after a preliminary injunction in a Southern District of New York case altered the appeals process and review standard for some projects. "The judge issued a preliminary injunction... they said that the department could invoke a process where they would give 14 days to appeal any cut off of funds," he said, adding that the department has given states an appeals window in some cases and that the appeals standard now emphasizes whether a project "provides necessary services that directly mitigate the effects of COVID on students' education," a standard district counsel said did not match earlier, broader guidance for allowable ESSER uses.
Cash-flow and vendor invoices: Finance staff said Snyder has three invoices outstanding (two identified at roughly $536,000 and $1.1 million, about $1.6 million total so far), installation and contractor invoices tied to the mSquare/Metcon projects are pending, and the district has been juggling county drawdowns and reimbursements. Erica said a $3.4 million check was deposited to the district and that the district planned to pay mSquare by the end of the week “minus the amount that we have to withhold for the finalization.” Finance staff warned the committee that, while many vendors have been cooperative so far, the district could face delays or halted work if payments are not made on schedule.
Why it matters: Staff said the department initially allowed ESSER dollars for a broad set of mitigation projects (HVAC, ventilation, roofs and related construction) but that the U.S. Department of Education is applying a narrower test in denials, creating a risk for in-progress projects that were approved under earlier guidance.
Next steps: Mister Schwartz said district counsel and state attorneys would meet with affected districts and DPI to discuss possible appeals and strategies, and that the district may seek the same appeals process others received. The committee received the briefing as information; no emergency decision or motion tied specifically to cash-flow was taken at the committee level.
Discussion vs. decision: Committee discussion focused on legal strategy, reimbursement timing and contingency steps; staff said they are coordinating with state and federal authorities and vendors and tracking invoices and project timelines.
