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Maryland says $232 million at risk after federal ESSER liquidation window closed; state files extension requests
Summary
Maryland education officials told the State Board that the U.S. Department of Education closed a late liquidation window for federal COVID ESSER grants on March 28, leaving as much as $232.1 million of funding — state and LEA obligations combined — at risk while Maryland seeks discretionary extensions and pursues legal avenues.
Maryland school finance officers told the State Board of Education on April 30 that a March 28 notice from the U.S. Department of Education rescinding the automatic late-liquidation extension for ESSER II and ESSER III funds left roughly $232.1 million at risk across the state if federal permission to extend spending deadlines is denied.
What happened: on March 28 the U.S. Department of Education announced that the extended late-liquidation period for certain pandemic relief funds had ended and that states that needed more time must submit project-by-project extension requests for the secretary’s discretionary approval. Maryland submitted multiple requests and a series of supporting documents to the U.S. Department of Education and to state fiscal partners.
Scope and figures: state staff told the board the total exposure is about $232.1 million. They broke that figure into $127.5 million in obligations that the state paid to local education agencies but which the state had not yet been reimbursed for, $46.2 million for ESSER III reimbursements the state has submitted and resubmitted to the federal government, and $58.4 million in local encumbrances and other items that districts say may be unspendable absent an extension. The department said some of those LEA encumbrances include invoices for services already provided.
Local effort and legal steps: department staff said they worked with chief financial officers and superintendents across counties to collect project-level documentation on short notice and that the attorney general’s office is engaged on multi-state legal efforts challenging the rescission of the late-liquidation approvals. Officials said a small number of states had submitted requests but, as of the April 30 meeting, Maryland had not received federal approvals for its resubmissions.
Consequences if denied: department leaders told the board that if the federal awards are not extended, the state — not the Department of Education — would be on the hook for the $127.5 million already paid to LEAs. The department and AG’s office are exploring legal options and coordination with other states while the board was told local budgets and next-year planning could be affected if the funds are not recovered.
Next steps: MSDE said it will continue to submit late-liquidation requests in the format requested by ED, keep LEAs apprised, continue legal coordination with the attorney general, and provide the board updates when federal decisions arrive.
