Arizona Sues White House Over Funds Tied to School Covid-19 Mandates

Arizona Governor Doug Ducey recently filed a lawsuit against the Biden administration, ramping up the political battle over Arizona’s use of federal funds for schools and districts not following public health recommendations.

Ducey’s legal team, in a 24-page federal complaint, asked a judge to prevent the U.S. Treasury from withholding or pulling back Covid-19 stimulus funds, after the Washington threatened to do so.

“The Biden administration is attempting to hold congressionally-appropriated funds hostage and is trying to bully Arizona into complying with this power-grabbing move,” said the governor in a statement.

The Biden administration and Ducey have gone back and forth since the fall over two education programs Gov. Ducey created that draw on the $173 million in American Rescue Plan aid.

In Arizona, funding is tied to a state law that prohibits Covid-19 mandates in schools. Schools that impose mandates are ineligible for the federal funding.

Although the law was later thrown out by a state court, Ducey has continued the programs. The Treasury department recently sent the governor a second, more forcefully worded letter threatening to withhold or take back the same dollar amount in federal funding if the governor does not make changes to the programs.

In response, Ducey filed suit in U.S. District Court.

The governor’s complaint argues that the U.S. Treasury’s final rule, which dictates how states can use funding, goes far beyond the scope allowed under the American Rescue Plan Act.

The act was passed by Congress and signed by President Biden in March 2021. The act specifies only two prohibitions on how money should be used — to make pension payments or to cut taxes.

However, the American Rescue Plan does direct the Secretary of the Treasury, Janet Yellen, to “issue such regulations as may be necessary or appropriate to carry out” terms of the law.

The Treasury only recently announced the final rule for how local governments and states can spend their collective $350 billion share of the federal stimulus law. The rule, which numbers 437-pages, takes effect in April and states that money cannot be used to fund a program “undermines efforts to stop the spread of Covid-19.”

Governor Ducey and his administration argue that the final rule cannot retroactively be applied and claims the Treasury also overstepped its expertise when it weighed into public health policy.

A Treasury spokesperson, Dayanara Ramirez, defended the new rule stating in an email, “Treasury believes the rule is correct and allowed by the statue and Constitution.”

Ducey’s lawsuit alleges violations of the federal Administrative Procedure Act and states the governor will not shirk in his support of the programs.

“The Governor’s Office will not eliminate or change the (education) programs to conform to Treasury’s unlawful dictates,” states the lawsuit.

School program funding crucial: Ducey

Before the beginning of the school year, Ducey created two funding streams: An educational recovery benefit, which gave families $7,000 per student if they moved there child from a district that had a mask mandate in place, and an education plus-up grant that gave districts funding if they did not impose mask mandates.

The recovery benefit was awarded to 93 students as of the end of November and the plus-up grant was allocated to 98 school districts, according to a review by The Arizona Republic newspaper.

Governor Ducey and his aides have confirmed that state dollars would be used to pay for the programs if they are defunded by the Treasury.

“In Arizona, our top priority is to get kids caught up, and we are using a wide range of resources to make that happen — including federal dollars allocated to our state. Make no mistake, we will always support families and kids, while protecting their right to choose an education that best fits their needs,” said Ducey.

A number of Republican politicians recently jumped into argument over funding, hoping to pressure the Treasury to back off.

Attorney General Mark Brnovich, who is seeking the GOP nomination for U.S. Senate, sent a letter to Treasury Secretary Yellen, urging her to stop the “blatant federal encroachment” on the state’s authority.

A slate of Arizona Republican representatives — Reps. Debbie Lesko, David Schweikert, Andy Biggs and Paul Gosar — chimed in on the dispute.

All four of the representatives voted against the American Rescue Plan last year. However, their letter urged Yellen to retract her threats to withhold funds.

“Threatening to take funding away from a state that is designing and implementing innovative solutions to meet the unique needs of its residents is an abuse of federal authority and fails to make up for the lost education caused by this virus,” said the letter.

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