UPDATE: We are hearing that the process for the extended liquidation of ESSER funding may not be as straightforward as we initially relayed to superintendents. While we are still awaiting formal guidance from ED, thus far ED has indicated that liquidation period extensions cannot be applied for in advance.  That is, LEAs cannot apply for liquidation period extensions before the funds expire. In the case of ARP funds, this means one must wait until close to or after September 30, 2024 to apply for a late liquidation extension. 

We understand this presents significant barriers for districts to utilize the late liquidation flexibility for school construction and HVAC upgrades as well as other contracted services. We are urging ED to quickly outline the process for applying for liquidation extensions and to do so in a way that ensures districts can confidently proceed with contracts that may have later deliverables beyond September 30, 2024. 

AASA has sounded the alarm for months that district leaders are concerned about the timeline for spending ARP funding for school facility upgrades and HVAC updates by September 2024.  

On May 19, ED sent an official response back to AASA clarifying that they will allow States and districts to apply for an additional 18 months to liquidate funding for all ESSER tranches of funding (including ARP) for school facility upgrades/HVAC work. In the context of ARP, this means that if the contract for these projects is signed by the district by September 2024, then the project would not need to be liquidated and the ARP funds completely spent until April 2026.

AASA’s Executive Director, who the Department letter was addressed to, had the following to say: “After numerous discussions with Secretary Cardona and his staff, we are thrilled that, today, they were able to expeditiously provide clarity to AASA members about the timeline they have to complete desperately needed school facilities projects and HVAC upgrades. The responsiveness of this Department to district leaders is unparalleled. We are grateful for the flexibility and clarity that Secretary Cardona is providing around school construction timelines and in particular, HVAC upgrades. Given inflation, supply chain issues and labor shortages, we know that districts want to invest these funds wisely and the knowledge that they have 18 additional months to liquidate funding will hopefully provide them with the assurance needed to move forward with using ARP funds for these contracts and obligations.”

Districts do not need to individually apply for this flexibility, but states do have to apply on behalf of districts. Based on our conversations with CCSSO and other state groups, we feel confident that SEAs will not hesitate to apply for this additional spending runway on behalf of districts that need it, and the process for them to do so is a familiar and straightforward one. We do not know when the applications for late liquidation will become available for ESSER I, ESSER II and ESSER III/ARP. Of note, the letter does allude to the ability of districts to potentially receive a liquidation extension beyond 18 months if there are extenuating circumstances. However, this extension does not change the obligation for districts to obligate (i.e. sign contracts) by September 2024, which is only something Congress can change.

We encourage you to read the letter and share the letter with your contractors and vendors so they understand the circumstances under which they may be permitted to deliver goods and services beyond the original ESSER timelines. It is our hope that the extended timeline will also reduce costs for these projects given supply chain challenges, inflation and labor shortages.