Dear Director Jimenez — Maintenance of Equity (March 22, 2024)

Summary

A letter dated March 22, 2024 from the Alaska Department of Education and Early Development, Office of the Commissioner, to Laura Jimenez of the U.S. Department of Education, responding to her letter of March 18 about the American Rescue Plan Act maintenance of equity provision. Alaska says state funding was not cut during fiscal years 2019-2023, that it has complied with the plain language of the Act, and that the federal guidance came out in a series of FAQs and a regulation over a significant period. It says supplemental payments to four districts would require an appropriation by the legislature, whose session ends May 15, 2024. It cites court decisions on ambiguous conditions on federal grants and says it is not looking for a constitutional dispute.

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“Dear Director Jimenez — Maintenance of Equity (March 22, 2024).” Original at www.ed.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/department-of-education-3-22-2024-alaska-www-ed-gov-f78f3d4dd7-48930cb460/, SHA-256 4ba223f634c86824ce07f70559bfdc727e1965439d3d0a3ff1014bf3801d4499.

Full text

Department of Education
& Early Development
OFFICE OF THE COMMISSIONER
333 Willoughby Ave., 9th Floor, SOB
P.O. Box 110500
Juneau, Alaska 99811-0500
Main: 907.465.2800
TTY/TDD: 907.465.2815
Fax: 907.465.2806

March 22, 2024

Laura Jimenez
Director, Office of State and Grantee Relations
Office of Elementary and Secondary Education
U.S. Department of Education
400 Maryland Ave SW
Washington, D.C. 20202-6244

Re: American Rescue Plan Act and Maintenance of Equity

Dear Director Jimenez:

This is in response to your letter of March 18 and concerns our ongoing discussions regarding
the State of Alaska (“SOA”) Department of Education and Early Development (“DEED”), its
receipt of American Rescue Plan Act (“ARPA”) funds during the COVID-19 pandemic, and the
Maintenance of Equity provision included in the ARPA.

Congress enacted the ARPA 1 on March 11, 2021, in order to provide important federal
assistance to the nation in response to the COVID-19 pandemic. Section 201 of the bill provided
emergency funding to alleviate the consequences of the pandemic on the nation’s school children
including to address a wide range of needs triggered by the pandemic such as assistance in
reopening schools safely, ensuring safe operation of the schools, and addressing students’ social,
emotional, mental health and academic needs.

The ARPA included a first-of-its-kind Maintenance of Equity (“MOEquity”) provision which
has been the subject of communications between our respective agencies. The new MOEquity
provision required that as a condition of receiving ARPA education funding, a state could not
reduce per-pupil funding to “high needs” and “highest-poverty” local educational agencies
(“LEAs”). 2 Specifically, Congress provided that a state was not permitted to: reduce the per-
pupil amount of State funding for any high-need LEA by an amount that exceeds the overall per-
pupil reduction in state funding; or reduce the per-pupil amount of State funding for any highest-
poverty LEA below the per-pupil amount provided to the LEA in 2018-2019. Furthermore, the
FAQs issued by the United States Department of Education (“USDOE”) state “.., if State or local
funds are cut, the maintenance of equity provisions ensure that LEAs and schools serving a large
share of students from low-income backgrounds do not experience a disproportionate share of
such cuts in fiscal years (FYs) 2022 and 2023, and that the highest poverty LEAs do not receive
1
Public Law 117-2.
2
Public Law 117-2, Sec. 2004;135 STAT. 24-25
Director Jimenez, Alaska Maintenance of Equity
March 22, 2024
Page 2 of 4

a decrease in State funding below their FY 2019 level.” State funding was not cut during fiscal
years 2019-2023. Instead, Alaska continued to apply and fund its base student allocation in
accordance with existing state law, 3 and it awarded ARPA funds to districts. Accordingly, there
is no question that the SOA has complied with the plain language and clear intent of
Congress when it enacted the ARPA and the MOEquity provision.

While the SOA did not reduce per student state funding to high-need or high-poverty LEAs
during the pandemic and the funding for school districts continued to be determined based on the
SOA’s equalized funding formula in state law, the SOA has responded to USDOE inquiries
related to MOEquity. In this regard, a series of communications have been exchanged between
USDOE and the SOA. The impetus for some of the inquiries and clarifications stems from the
fact that although Congress’s intent regarding MOEquity is clear from the language of the
legislation and its purpose, this was a new provision never before included in a federal grant
related to education and thus federal guidance was neither immediate nor comprehensive. For
example, federal guidance was first released regarding the new MOEquity requirements in the
form of FAQs in June 2021 but by the fall, USDOE was seeking written comments on a variety
of MOEquity implementation questions. A “Dear Colleague” letter was issued by the department
in August 2021 which included preliminary analysis on some MOEquity issues. In December
2021, updated FAQs were published by USDOE. In July 2022 a regulation regarding MOEquity
became effective. 4 Also in July 2022, additional FAQs were issued by the department. The most
recent FAQ was issued by the department in January 2023.

The latest communication from your office, March 18, 2024, recognizes Alaska’s highly unique
circumstances compared to other states in relation to the operation of public schools such as its
geography, the remote locations of municipalities, and multi-site LEAs which span large
geographic areas which are not connected by a road system and often have an absence of
infrastructure. We appreciate the department’s recognition of the unique and challenging
circumstances of providing services including public education in such a large and
geographically isolated state. The communication also describes the efforts by DEED to address
questions from your department and DEED’s submission of a revised “tolerance” proposal and
additional data. The department’s letter indicates that based on USDOE’s analysis to date,
certain additional payments to four school districts should be made to come into compliance with
MOEquity and requests information regarding a plan for how the SOA would take such action.
We provide the following information.

First, expenditures of state funds require an appropriation from the Alaska legislature. 5 The
appropriation process is set out in the Executive Budget Act. 6 In accordance with state law, the
Governor may submit supplemental appropriation requests to the legislature for consideration.
Alaska’s 33rd Legislature is currently in session, which ends on May 15, 2024. If a supplemental
appropriation is included in the final enacted budget, then the process to make payments could
occur. However, if a supplemental appropriation is not in the final enacted budget, then a

3
Alaska Statute (AS) 14.17.470.
4
87 FR 34790.
5
Alaska Const., art. IX, sec. 13.
6
AS 37.07.010- 07.130.
Director Jimenez, Alaska Maintenance of Equity
March 22, 2024
Page 3 of 4

supplemental appropriation would need to be considered by the legislature during the legislative
session beginning in January 2025.

Second, and importantly, we wish to reiterate that the SOA has met the MOEquity requirements
set out by Congress – State funding per-pupil remained the same in accordance with state law
and was not changed during the pandemic. 7 A suggestion that SOA failed to meet Congress’s
plain language requirements regarding MOEquity is concerning for several reasons. Initially, it
appears that the only rationale that could support a contention that the SOA did not meet
MOEquity would be that a mix of federal agency regulation and guidelines effectively changed
the plain language of the statute which of course is not permissible. Moreover, even if the statute
establishing the MOEquity condition was ambiguous, which it is not, there is no question that
MOEquity is a first-of-its-kind condition placed on a federal education grant and that there was
significant confusion regarding how the federal agency was interpreting the statutory language as
evidenced by the different FAQs, regulations, and guidelines issued by USDOE over a
significant period after Congress passed ARPA. Add to that the fact that ARPA was emergency
federal funding provided to states in response to an international pandemic and it becomes clear
that an application of the MOEquity funding rules beyond the statute’s plain and ordinary
meaning could trigger significant constitutional questions.

Alaska enjoys a good working relationship with USDOE and is certainly not looking for a
constitutional law legal dispute. But we would be remiss not to note that although the federal
government has the ability to place conditions on a state’s acceptance of federal funds, there are
limits to that authority under the Constitution. 8 For example, the Supreme Court in Pennhurst
State School and Hospital v. Haldernan 9 ruled in favor of Pennsylvania in a suit regarding a
federal grant which was subject to conditions that the state contended were ambiguous. The
Supreme Court stated that “[t]hough Congress’ power to legislate under the spending power is
broad, it does not include surprising participating States with post-acceptance or retroactive
conditions” and that “if Congress intends to impose a condition on the grant of federal moneys it
must do so unambiguously.” 10 Similarly, in National Federation of Independent Businesses v.
Sebelius 11 the Supreme Court determined that the Medicaid expansion provisions of the
Affordable Care Act went beyond what the states would have expected when they had agreed to
participate in Medicaid and accept federal funds. And in the context of ARPA, the Eleventh
Circuit ruled last year that a condition placed on states’ receipt of federal grant money that
sought to restrict states’ taxation authority (an offset condition) violated the Spending Clause
because of its ambiguity. 12

Here, the MOEquity provision was a new provision not previously attached to federal education
grant funding – and it was attached to emergency funding during a pandemic. Additionally, if the
plain language and intent of the bill is not applied and instead MOEquity is considered an

7
Alaska Statute (AS) 14.17.470.
8
See South Dakota v. Dole, 483 U.S. 203 (1987).
9
451 U.S. 1 (1981).
10
Id. at 20; 25.
11
567 U.S. 519, 132 S.Ct. 2566 (2012).
12
West Virginia v. U.S. Department of the Treasury, 59 F.4th 1124 (11th Cir. 2023).
Director Jimenez, Alaska Maintenance of Equity
March 22, 2024
Page 4 of 4

ambiguous provision that required multiple complex interpretations over time by a federal
agency, we are in a circumstance that squarely implicates the Supreme Court’s concern that
conditions placed on the receipt of federal money must be unambiguous and not beyond what a
state would have expected when it agreed to accept federal funds in order to comply with the
Tenth Amendment.

We have outlined above the steps that would be necessary for the State to meet what USDOE
currently perceives to be obligations under the MOEquity provision. But we do want to urge
your office to further review the steps taken by DEED so far in response to requests for
information. Most importantly, we urge that USDOE focus on the fact that SOA has clearly met
the plain language requirements and plain purpose of Congress’s inclusion of MOEquity: Alaska
did not cut state spending. Alaska continued to apply its per-pupil spending law set out in AS
14.17.470 and did not seek to take advantage of federal funds to reduce state education spending.
We look forward to further communication with your office.

Respectfully,

Deena M. Bishop, Ed.D.
Commissioner

cc: Lacey Sanders, Director, Office of Management and Budget
Sarah Laven Jones, Management and Program Analyst, U.S. Department of Education

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