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COVID-19 Coverage

Governor Sues Feds Over Use of COVID-19 Relief Funds

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Capitol Media Services photo by Howard Fischer
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By Howard Fischer
Capitol Media Services
PHOENIX -- Saying he is protecting children from possible social, emotional and mental health effects of having to wear a mask, Gov. Doug Ducey on Friday asked a federal judge to rule he is doing nothing legally wrong by denying federal COVID relief funds to schools with mask mandates and giving parents vouchers to remove their youngsters from those schools.
In new legal papers filed in federal court here, Anni Foster, the governor's legal adviser, says there is nothing in the federal law that requires him to spend cash from the American Rescue Plan Act only in ways that the U.S. Treasury and Treasury Secretary Janet Yellen say conform with ways the Centers for Disease Prevention and Control say will fight the virus.
Instead, Foster says, Yellen and the agency effectively made it that requirement, crafting rules for the Coronavirus State and Local Fiscal Recovery Fund that exceed the agency's federal authority. And now Treasury is demand that Ducey return the $173 million or it will withhold future federal aid.
"Treasury has no background expertise in public health,'' Foster told U.S. Magistrate John Boyle, saying that its rules -- the one it is accusing Ducey of violating -- based on the agency's "subjective and ill-informed opinion.''
What it also is, Foster told Boyle, is an exercise by Yellen and the agency of its powers that he should rule are illegal.
"Nothing in the underlying statute authorizes Treasury to condition the use of SLFRF monies on following measures that, in the view of Treasury, stop the spread of COVID-19,'' Foster wrote.
"If Congress had truly intended to give Treasury the power to dictate public health edicts to the states, and recoup or withhold SLFRF monies based on an alleged lack of compliance with such edicts, it would have spoken clearly on the matter,'' she continued. "It did not.''
In filing suit, Ducey is seeking to bring the matter to a legal head on his own terms -- and in a federal court in Arizona -- rather than have to haggle with Treasury in some other legal forum over its efforts to take the money back.
At issue are two separate programs Ducey is financing with the dollars.
One is dividing up $163 million among school districts and charter schools that had received less than $1,800 per student under prior COVID relief programs.
But the governor said only those schools that do not require the use of face coverings during instruction hours are eligible. And they must remain open for in-person instruction through the remainder of the school year.
Ducey also set aside another $10 million in grants to parents whose schools continue to require masks.
Those funds, up to $7,000 per child, can be used for everything from online tutoring and child care to tuition to attend private and parochial schools. Any family below 350% of the federal poverty level -- about $92,750 a year for a family of four -- is eligible.
All that resulted in a letter last year from Treasury questioning whether that complies with the agency's rules. And when it didn't like the response from Ducey that it liked, it ordered him to rescind the policies or give back the cash.
Foster is not relying totally on her claim that the rules Treasury enacted governing the use of the cash are not only unjustified but also prohibited by federal law.
She also told Boyle that Ducey's use of the funds -- and his focus on whether schools require masks -- is consistent with the intent of Congress to promote programs that address the negative economic impact of COVID-19. And that, she said, includes programs focused on educational impacts of things like remote or hybrid learning which "disproportionately affected low-income and minority students.''
"The programs empower parents and students to exercise their freedom to make informed decisions regarding their health and educational needs,'' Foster said.
More to the point, she said that the restrictions her boss placed on the use of the money -- the schools that are eligible and the cash to send students to schools without masks -- fits squarely within the legitimate use of the dollars.
"For parents who prioritize their child's social, emotional, and mental health needs and believe a mask mandate would adversely impact their child, the program offers these parents the freedom and funding to enroll their students in a different program absent a mask mandate,'' Foster said. And she dismissed any argument that the only way to stop the spread of virus is through masks, pointing out the state offers free testing for all residents.
Anyway, Foster said, nothing in Ducey's conditions for schools getting the cash requires them to forbid students from wearing face coverings.
"Schools have every ability to encourage practices recommended by the CDC and students were not prohibited from doing so,'' she wrote.
Issues of whether the rules were enacted illegally, Foster has some backup legal arguments.
She acknowledged that Congress does have the power to impose conditions on how the states spend federal money. But Foster said that has to be done "unambiguously'' to allow states to decide whether to accept the cash and the strings attached.
In this case, though, she said there is nothing in the law authorizing the program that alerts states to the possibility that the funds might be rescinded based on the changing guidelines from the Centers for Disease Prevention and Control about how to prevent the spread of COVID.
Separately, Foster contends that even if Congress agreed to empower Treasury to set rules on the use of the funds -- she contends it did not -- it was illegal for federal lawmakers to delegate that power to an agency.
No date has been set for a hearing.

On Twitter: @azcapmedia

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