School Funding

Biden administration threatens to claw back Arizona Covid funds over school’s anti-mask policies

U.S. First Lady Jill Biden talks to people during a tour of a COVID-19 vaccination site at Isaac Middle School in Phoenix, Arizona, June 30, 2021.

caroline kaster | Swimming pool | Reuters

The Biden administration on Friday threatened to rescind millions of dollars in federal coronavirus aid for Arizona, accusing the state of using the funds to undermine efforts to stop the spread of the virus.

Republican Gov. Doug Ducey’s office has 60 days to either modify two federally funded public school programs totaling $173 million or redirect the money to “eligible uses,” the Treasury Department said in a letter.

The programs impose conditions that discourage mask-wearing compliance in schools, contradicting Centers for Disease Control and Prevention guidance on how to reduce Covid transmission, the letter says.

If Arizona fails or refuses to comply with Treasury demands, the Biden administration could claw back that stimulus money and withhold a second tranche of pandemic relief funding, the Treasury said.

Ducey’s office did not immediately respond to CNBC’s request for comment on the letter.

The federal funds in dispute come from the Coronavirus State and Local Fiscal Recovery Funds, or SLFRF, program, a $350 billion tranche of the multi-trillion-dollar Covid relief package, dubbed the US bailout, that President Joe Biden has enacted last year.

The funds are intended “to mitigate the fiscal effects arising from the COVID-19 public health emergency, including supporting efforts to stop the spread of the virus,” Treasury noted in the letter to the Office of Strategic Planning. and Ducey’s budgeting.

But Arizona’s two school programs use federal money to “impose conditions on participation in or acceptance of service that undermine efforts to stop the spread of COVID-19 and discourage adherence to evidence-based solutions. on evidence to stop the spread of COVID-19,” the letter said.

the $163 Million Education Plus-Up Grant Program, for example, allows funds to be awarded only to schools that do not enforce mask requirements, the Treasury wrote.

the other program in question, totaling $10 million, provides grants to help parents remove their children from schools deemed to impose “unnecessary school closures and mandates.”

This program “is only available to families if the student’s current or previous school requires the use of face coverings” during the school day, the Treasury letter said.

The latest letter, sent by Acting Deputy Chief Compliance Officer Kathleen Victorino of the Treasury’s Office of Stimulus Programs, follows months of back-and-forth between the Biden administration and the Grand Canyon State.

In October, the Treasury Department had asked Arizona to explain how it would solve the problems identified in the two school programs.

The state responded a month later, detailing its rationale for the anti-mask requirements but not “describing any plan to address the issues identified,” Victorino wrote.

The latest battle over Covid safety rules comes as the highly transmissible omicron variant fuels an unprecedented rise in cases. The U.S. Supreme Court on Thursday blocked enforcement of the Biden administration’s rule allowing employees of big companies to get vaccinated or undergo weekly tests, but the High Court left intact a vaccination mandate for health workers.

But disputes precede omicron. Last year, Arizona’s Republican-controlled legislature tried to pass provisions banning mask mandates and other Covid safety measures. In November, the State Supreme Court ruled that these measures had been adopted unlawfully.

CNBC’s Tom Franck contributed to this report.