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U.S. Treasury threatens to claw back Arizona funds over anti-masking school grants

U.S. Treasury threatens to claw back Arizona funds over anti-masking school grants
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WASHINGTON (Reuters) – The U.S. Treasury told Arizona officials on Friday that it may recover some of the state’s pandemic aid money and withhold future payments unless the state stops or redesigns education grant programs that target schools without convictions.

In a letter to the office of Arizona Governor Doug Ducey, the Treasury said two programs, including a $163 million grant program for schools that follow state laws banning public school mask mandates, are “disqualifying uses” of state and local financial recovery funds.

The $350 billion state and domestic funding program was enacted last year as part of the US COVID-19 Rescue Plan Assistance Act.

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Another $10 million program in Arizona that is deemed ineligible is offering a $7,000 education grant to families of students to obtain an alternative education if their school requires face coverings.

The Treasury said Arizona must redesign programs to comply with Centers for Disease Control and Prevention guidelines on blanket concealment of students, teachers, staff and visitors to K-12 schools, or redirect funds to other eligible uses under Treasury rules.

“Failure to take either step within 60 calendar days may result in Treasury initiating action to recover SLFRF funds used in violation of eligible uses,” Kathleen Victorino, the department’s acting deputy chief compliance officer, said in the letter.

The department added that it may also withhold Arizona’s 2022 payment of state and local aid funds until the Treasury confirms that education funding issues have been resolved. The Arizona Department of the Treasury first warned the state of noncompliance programs in October.

Dossey, a Republican, said on Twitter that the Treasury Department’s letter “is the latest example of a president who is so far removed from the American people,” describing it as a “rewriting” of funding rules that would reduce funding for schools, especially in low-end schools. income communities.

The state will “respond to that message and we will continue to focus on the things that matter to Arizona residents,” Ducey said.

Arizona could face a withholding of up to $2.1 billion by the Treasury, the second half of its government’s allocation of $4.2 billion in COVID-19 aid money slated to be disbursed in 2022.

In addition, Arizona cities and counties received separate allocations based on their size and unemployment rates that would not be affected by the state’s dispute with the Treasury, including $871 million for Maricopa County, $203 million for Pima County, and $396 million for Phoenix.

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(Reporting by David Lauder) Editing by Jonathan Otis and Richard Chang

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