Mississippi’s private and public schools could lose more than $137 million after the U.S. Department of Education decided to rescind remaining COVID-19 relief funds. The federal government awarded the funds amid the pandemic to help states and school districts address issues arising from the crisis, but until this month had said it would allow states an extension to finish using the money.
The decision has left Mississippi education leaders reeling and school administrators scrambling to figure out how to proceed, with some schools potentially left holding the bag for work that is in progress and that depended on the funds for payment.
“This is the equivalent of you going to a lender and them granting you a half million dollar builders loan (but) you get $300,000 into it and (they) say, ‘Oh yeah, we’re only gonna give you $300,000,” Mississippi State Superintendent Dr. Lance Evans, who is trying to get the decision reversed, said during the Mississippi Board of Education meeting on Thursday. “Literally, that’s what it equates to.”
Schools are now wondering if they need to make immediate changes as they await updates.
“I’ve already had a lot of administrators reach out to us and tell us that they had already planned activities and uses for those funds that have not been pulled back,” Mississippi Association of Educators Executive Director Erica Jones told the Mississippi Free Press on April 7. “They’re concerned if they’re going to be able to do summer school programming, especially at the elementary level, and if they’re going to be able to maintain the number of certified staff that they normally would have each school year.”
U.S. Secretary of Education Linda McMahon sent a letter to state education departments on March 28, abruptly ending the time allowed to liquidate funds under the Education Stabilization Act by 5 p.m. EST on that same day—a year earlier than Mississippi education officials had expected. McMahon cited a federal law that requires award recipients to liquidate all obligations within 120 calendar days. The letter noted that a federal agency may approve extensions if it finds them justified.
“The Department has concluded that the further extension of the liquidation period for the aforementioned grants, already well past the period of performance, was not justified,” McMahon wrote. “You and your subrecipients have had ample time to liquidate obligations.”
The federal government had previously approved a late liquidation of more than $181,243,897 in American Rescue Plan Elementary and Secondary School Emergency Relief funds, more than $2,553,972 in American Rescue Plan Homeless Children and Youth funds, and $29,539,694.22 in ARP Emergency Assistance to Non-Public Schools funds for Mississippi. Emergency Assistance to Non-Public Schools funds were awarded to the State Treasurer’s office to distribute to non-public schools with a significant enrollment of low-income students impacted by COVID-19.
McMahon said that because the extension request was filed recently, the state should not be reliant on the funds. She also indicated that the agency was entitled to rescind its decision. The letter said the department will consider extensions to liquidation periods on an individual project-specific basis.
‘Districts Have Contractual Obligations’
Since 2020, Mississippi has been awarded nearly $2.5 billion in federal funds delivered in three phases. The Mississippi Department of Education received nearly $170 million in Coronavirus Aid, Relief, and Economic Security Act or CARES Act funds, more than $724 million in Coronavirus Response and Relief Supplemental Appropriations Act or CRRSA funds and $1.6 billion in American Rescue Plan Act funds. The money provided the opportunity for Mississippi schools to make transformative changes. Local education agencies in the state were able to hire additional staff, implement new curricula and supplements, and improve school buildings.
Schools had until Sept. 30, 2024, to obligate ARP or ESSER III funds, and the state had applied for a late liquidation to extend that deadline until March 2026. As part of that process, districts were required to submit an application to the Mississippi Department of Education detailing their intended use of the funds with a purchase order or an executed contract. The liquidation extension gave districts more time to receive the funds to complete payment on those obligations.
“Districts have contractual obligations that cannot simply be terminated without significant financial, educational, and legal consequences,” MDE said in a press release on April 3. “Many of these projects are partially completed, with work occurring based on the timeline ED previously approved.”
Not the First Extension
Officials at Georgetown’s Edunomics Lab expressed concern last September that the state still had unspent money from the previous disbursement of ESSER funds. Districts had until Sept. 30, 2023, to obligate funds from the CRRSA, also known as ESSER II. Georgetown’s data revealed that Mississippi had more unspent ESSER II funds than other states.
“As of the most recent report submitted to the federal government, it looks like Mississippi districts only spent 94% of ESSER II funds,” Roza told the Mississippi Free Press on Sept 6. “That’s the (second) smallest share spent of any state. Maryland is the highest; Mississippi is the second highest.”
Mississippi Department of Education Director of Federal Programs Judy Nelson clarified on Sept. 5 that those numbers did not reflect money that had already been assigned for projects but was still unpaid. The state agency also applied for a liquidation extension of those funds. It gave Mississippi’s public school districts and public charter schools until March 2025 to fully disburse funds for those contracts.
“Districts are still pulling down money from ESSER II,” Nelson told the Mississippi Free Press on Sept 5. “They have until March of 2025 to continue to draw down money.”
The most common reasons presented by districts requesting delays included extensions of construction projects due to supply-chain issues or weather conditions and challenges completing professional development contracts.
Roza noted concerns during that time about districts spending the second allocation while already receiving the third.
“Claiborne County School District looks like it still has $2 million. It could be still spending it down, but given that they had all this additional ESSER III money already on their balance sheet, I don’t know what was taking them so long to spend ESSER II,” Rosa said. “That makes me concerned. And you know, (Mississippi) is one of the states with a lot of unspent money in ESSER II.”
Finding the Money
The Mississippi Department of Education sent a letter to McMahon on April 2, explaining that the change would create a hardship for the state. In that letter, Evans outlined the state’s use of the funds, including infrastructure improvements, technology access and mental health services. He also noted that a recent change in the process for requesting the funds had resulted in payment delays.
“I respectfully request that you withdraw your March 28, 2025, letter and reinstate the March 31, 2026, liquidation deadline,” State Superintendent Dr. Lance Evans wrote. “This allows Mississippi to fulfill the commitments made to our communities based on their significant needs and ED’s prior written authorization.”
MAE’s Erica Jones said the loss of funds will directly affect students as schools seek to find ways to absorb the cuts.
“For example, an elementary school that would normally have 10 first-grade teachers may have to cut it back to eight,” she said. “That will create larger class sizes.”
The agency said it was working to recover the money and offering guidance to impacted districts, including pausing contracts and services already underway.
“The MDE shares the same level of anxiety that districts are experiencing as a result of the ED’s decision. We have requested the ED reinstate the March 31, 2026, liquidation deadline, and we believe it has a legal obligation to fulfill our request,” Evans said in the statement.
Mississippi is already reeling from President Trump’s plan to close the U.S. Department of Education. U.S. Secretary of Education Linda McMahon plans to transfer the agency’s responsibility to other agencies, which places more federal funds in jeopardy.
Evans said during the Mississippi Board of Education’s April 17 meeting that communication from DOE to the state have been slow. But the state has now received instructions from the federal government on how to apply to have the extension reinstated, he added. Evans said he has advised districts to pause but not terminate contracts funded with the rescinded money.
“Because in the event the late liquidation is reinstated, there are spending requirements,” he said. “If you’ve terminated the contracts, you can’t meet those requirements. So that’s a whole other set of issues.”
Evans told the board that he does not believe that any state will get all of the funds they initially expected. However, he plans to meet the requirements to get as much as possible.
“We’re asking for every one of them,” he said. “It’s not a negotiation, right? It’s a ‘Hey, we need what we were promised.’”
