ED Releases New ESSER FAQ Document

On December 7, ED released non-binding guidance that answers long-awaited questions from the field about how ESSER funding can be spent. This document leaves much to be desired and may make it more challenging for districts to spend money by the ESSER II and III obligation deadlines.

Throughout the FAQ, ED reiterates that it “strongly discourages LEAs from using ESSER funding for construction, as this use of funds limits an LEA’s ability to meet other, more pressing needs related to the pandemic’s impact on learning and the emotional and mental health and well-being of our children and youth.” ED also warns districts about using the funding for “extensive remodeling and renovation” because of the timeline constraints. Rather than provide flexibility for districts that are already embarking on these projects or to help districts, who with community input, have decided that these projects are critical to “preventing, preparing for, and responding to the pandemic,” ED has decided to criticize these decisions and chastise districts for these expenditures. While ED cannot prohibit districts from using the funds for these projects, they are clearly demonstrating an unwillingness to provide any flexibility to districts if project completion runs over the obligation deadline.  

ED also has clarified that there are potential restrictions on ESSER funding that were previously covered by other guidance. For example, a State had written to ED asking if they could use ESSER dollars to cover the surge in fuel prices that was impacting their transportation budget and ED had said yes. In the guidance document, they now state that utilities-related expense are only permitted if they directly relate to indoor air quality. Similarly, the FAQ states that remodeling a school athletic facility would not be permissible unless the district could tie it to preventing, preparing, and responding to the pandemic. This is a confusing interpretation as a district that would want to update locker rooms or put in turf to expand PE options and afterschool activities may not be approved unless they can tie it to the pandemic. 

As it pertains to liquidation, this guidance document remains silent on any possibility of a liquidation extension for ESSER II or ESSER III (ARP) funding. While ED suggests that it would be fiscally irresponsible for a district to sign a multi-year contract with, in one example, a software licensing vendor, it states that if the SEA agreed to allow the LEA to do it then the LEA could use ESSER funds to pay for the entirety of the software license within the liquidation period and the vendor could provide services (software and tech support) beyond the liquidation period. The liquidation period is presumed to be 18 months in this example. It is confusing that on the one hand ED says that it would not be prudent for districts to prepay for services that will extend many years into the future, and then to gives one example of how a district could utilize liquidation flexibility to do extend contracted services. Based on how the guidance frames the tenuousness of the late liquidation process, it would be better if districts did not plan for any flexibility with ARP funding. The guidance demonstrates the Department has not been compelled by any conversations, letters or other advocacy strategies with districts and states to grant flexibility around ARP late liquidation. 

We expect ED will hold a Q&A session in January for district leaders, so superintendents can ask questions about the guidance.