Middletown City schools seek remedies after U.S. Education Department liquidation rule puts $5.6 million on hold

Middletown City School District officials said April 28 they are pursuing every available step to restore roughly $5.621 million in federal ESSER money that the U.S. Department of Education temporarily put on hold.

Treasurer Randy Bertram told the board that Secretary McMahon issued a modified liquidation rule under 2 CFR 200.344(c), signed March 28, that requires federal award recipients to liquidate obligations within 120 days of an award ending. Bertram said the district’s late‑liquidation application for ESSER funds was submitted Feb. 18 and approved at the state level on March 26, but the department’s rule went into effect March 28 and the district later received notice to stop spending while the issue is resolved.

Bertram said the department’s one‑page memo allows award recipients to request an extension if they can show the project remains necessary to mitigate the effects of COVID‑19 on students. He said the district will “look for remedies, how we continue the project and what we’re doing to try to unclaw that money or claw it back into our coffers.”

District officials said they immediately contacted state and federal lawmakers. On April 7 the district sent letters and photos to Ohio and U.S. legislators, including U.S. Rep. Warren Davidson and state lawmakers, and on April 9 staff began phone coordination with Davidson’s office. The district also received a letter from its legal counsel outlining remedies. On April 23 district staff submitted a required state survey asking for reinstatement; they said Ohio’s office gave a one‑week window to submit additional documentation and Chief of Staff Aaron Roush at the Ohio Department of Education offered to hold the state application rather than forward it immediately to Washington while additional documentation arrived.

Bertram said the district has asked members of its delegation — and secured letters of support from Rep. Davidson and other lawmakers — and also provided project photos to underline the practical difficulty of stopping major construction midstream.

What happens next: The district is compiling documentation showing why the project extension remains necessary and has asked state and federal officials to exercise discretion to approve an extension. Officials told the board they will continue outreach to the department, state staff and members of Congress while the district proceeds with contingency planning.

Ending: District officials recommended continuing outreach to state and federal lawmakers and preparing the documentation the department requests for an extension. Bertram said staff would return to the board with any substantive updates and with next steps if the department denies the extension or continues the hold.