July 31, 2025
Written by Sasha Pudelski, Director, Advocacy at AASA, The School Superintendents Association and member of the AESA advocacy team
On July 30, the U.S. Department of Education (USED) released funds to states that had previously been withheld under Titles I-C, II-A, III-A, and IV-A of the Elementary and Secondary Education Act, as well as the Adult Education and Family Literacy Act. According to the Office of Management and Budget (OMB), USED officials indicated that new “guardrails” will be implemented to ensure the funds are used in alignment with administration policies. However, the specifics of these additional guardrails remain unclear.
The Grant Award Notifications (GANs) simply added an assurance that funds must be spent in accordance with current laws, for example, Title IX of the Education Amendments of 1972, Title VI and Title VII of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act., etc. and that if a grantee uses funds for unallowable activities, ED may seek a recovery of funds under the General Education Provisions Act. However, these requirements have long been in existence and, as written, place no additional requirements on states or their districts.
Although the funds for the impacted programs were released late, the GANs issued to States note a July 1st start date for the period of availability. USED’s inclusion of the July 1st start date allows State and school districts to charge allowable obligations going back to July 1, covering the period during which the funds were withheld.
Districts with applications that were deemed approved or “substantially approved” by the State on or before July 1st can charge obligations back to that date and no further action is required for those obligations. If the State did not approve a District’s application on or before July 1st, then the LEA must submit its application and have it approved or “substantially approved” by the state to start to obligate the funds. However, the state can permit pre-award costs for any obligations incurred between July 1st and when the District’s application is approved or “substantially approved”.
Pre-award costs are allowable program costs incurred before the start date of the award and in anticipation of the Federal award where such costs are necessary for efficient and timely performance of the scope of work. Therefore, if your state does not automatically permit pre-award costs this year (which many have indicated they will do), districts should request pre-award cost approval to cover those expenditures going back to July 1st.
Moving forward, AESA will continue to educate Congress and the administration on the importance of reliable, stable federal funding to ensure this type of delay does not happen again.