Letter to the Alaska Department of Education and Early Development — Maintenance of Equity (October 18, 2024)

Summary

A letter dated October 18, 2024, from Adam Schott, Principal Deputy Assistant Secretary of the Office of Elementary and Secondary Education, to Commissioner Bishop of the Alaska Department of Education and Early Development. The letter follows a withholding notice of September 13, 2024, and a show cause letter of September 30, 2024, about maintenance of equity under the American Rescue Plan Act of 2021. It states that the State did not sufficiently show cause and that the Department is suspending authority to obligate and draw down $5,556,632 pending the outcome of the administrative hearing on the withholding. It also describes ways the State may come into compliance, including supplemental payments or a formal written agreement.

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                                  UNITED STATES DEPARTMENT OF EDUCATION
                                       OFFICE OF ELEMENTARY AND SECONDARY EDUCATION




                                                        October 18, 2024


The Honorable Deena M. Bishop
Commissioner of Education
Alaska Department of Education and Early Development
P.O. Box 110500
Juneau, AK 99811


Dear Commissioner Bishop:

The U.S. Department of Education (Department) notified the Alaska Department of Education and Early
Development (AK DEED) by letter on September 13, 2024, (withholding notice) that we intended to
suspend AK DEED’s authority to obligate $5,556,632 of Federal funds awarded to Alaska under the
American Rescue Plan Act of 2021 (ARP Act) Elementary and Secondary School Emergency Relief
(ESSER) grant program, pending the outcome of withholding proceedings on Alaska’s non-compliance
with the ARP Act’s maintenance of equity requirements (§ 2004(b)) for fiscal year 2023. In our many
communications with State officials, we have reiterated the intent to suspend AK DEED’s authority to
obligate these funds and encouraged the State to come into compliance with the ARP Act’s
requirements.

The Department is authorized to suspend AK DEED’s authority to obligate funds, including authority to
draw down those funds to liquidate obligations, under section 455 of the General Education Provisions
Act (GEPA) (20 U.S.C. § 1234d(d)) after providing AK DEED “reasonable notice and an opportunity to
show cause why … authority to obligate Federal funds should not be suspended.” Under this provision,
AK DEED had an opportunity to explain why the Department should not suspend AK DEED’s authority
to obligate the funds at issue pending the outcome of the withholding proceedings, which it did in its
show cause letter of September 30, 2024.

Suspension is a temporary, time-limited administrative measure that is used to ensure the Federal funds
subject to a withholding proceeding are protected pending the outcome of the withholding hearing.
Without such a suspension, AK DEED could obligate and draw down the funds that are the subject of
the withholding hearing before those proceedings are completed—an outcome that would make the
withholding proceeding meaningless. Based on the clear meaning of the statutory suspension authority
(GEPA § 455(d), 20 U.S.C. § 1234d(d)), a decision to suspend access to funds pending the outcome of a
timely withholding hearing is made by the Assistant Secretary, pursuant to his delegated authority, and
is not subject to review by the Office of Administrative Law Judges (OALJ). I note that on October 15,
2024, the Department received AK DEED’s request for a hearing on the proposed withholding of these
funds. Many of the issues raised in AK DEED’s show cause letter are the same issues that are the
subject of the withholding hearing requested and are properly addressed in that forum.

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   The Department of Education’s mission is to promote student achievement and preparation for global competitiveness by fostering
                                         educational excellence and ensuring equal access.
Page 2 –The Honorable Deena M. Bishop

After considering the applicable arguments made in your show cause letter, I have determined that AK
DEED did not sufficiently show cause as to why its authority to obligate funds should not be suspended
pending the outcome of a hearing on the withholding determination. This conclusion is based on the
need to ensure that the funds at issue are not drawn down and liquidated as part of the obligation process
during the withholding proceedings on this matter, and the fact that Alaska local educational agencies
(LEAs) would suffer irreparable harm if the maintenance of equity requirements were not met, and a
suspension was not imposed. Alaska did not indicate any plan to ensure funds for the impacted LEAs are
protected if it does not prevail in the withholding hearing or other actions it proposes to remedy its
noncompliance with the maintenance of equity requirements (e.g., mediation or entering into an
agreement).

For these reasons, I am suspending AK DEED’s authority to obligate and draw down the $5,556,632
associated with the amount of funds necessary to resolve this matter, pending the outcome of the
administrative hearing regarding the withholding of these funds.

AK DEED’s ARP ESSER grant remains on route payment status and the Department will carefully
review any requests to draw down funds to liquidate LEA obligations. Should AK DEED or Alaska
LEAs have obligated ARP ESSER funds that cannot be liquidated due to this withholding action, AK
DEED assumes responsibility for payment of these costs using State funds. Note that the deadline to
obligate ARP ESSER funds was September 30, 2024.

As described in the withholding notice, AK DEED may come into compliance with the maintenance of
equity requirement for fiscal year (FY) 2023 by making the required supplemental payments
($5,556,632 for FY 2023) to the affected LEAs now, or by entering into a formal written agreement with
the Department that details how the State will remedy the funding reductions of State funds to LEAs that
resulted in the non-compliance in FY 2023. To be clear, a memorandum of agreement committing
Alaska to issue the required supplemental payments at a later date in 2024 would be an acceptable
formal written agreement. Any such agreement would help ensure that ARP ESSER funds continue to
benefit Alaska’s students and schools while the State works to meet its legal obligations. My staff and I
remain available to discuss an agreement detailing a credible means of remedying the State funding
reductions that affected LEAs in both FYs 2022 and 2023.

If you need any assistance or have any questions regarding this matter, please do not hesitate to contact
me.


                                             Sincerely,



                                             Adam Schott
                                             Principal Deputy Assistant Secretary
                                             Delegated the Authority to Perform the Functions and
                                             Duties of the Assistant Secretary
                                             Office of Elementary and Secondary Education



Cc: The Honorable Mike Dunleavy, Governor


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