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Ducey to dispute U.S. claim he's misspending COVID relief money

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Gov. Doug Ducey is sending a letter to the U.S. Treasury in an effort to receive $163 million in federal COVID relief funds that the administration is threatening to withhold.

PHOENIX — Gov. Doug Ducey is preparing to fight the Biden administration’s threat to strip Arizona of $163 million in federal COVID relief money for public education.

The governor said Anni Foster, his legal counsel, is writing a letter to the U.S. Treasury responding to its claims last month that Ducey is using the money in illegal ways by giving it only to schools that do not require students and staff to wear masks.

Deputy Treasury Secretary Adewale Adeyemo said Ducey’s usage runs afoul of legal requirements to use the money for “evidence-based efforts to stop the spread of COVID-19.”

He said Ducey also is misspending the cash by giving out $7,000 vouchers — formally known as “empowerment scholarship accounts” — to parents who want to pull their kids out of schools with mask mandates and instead send them to private and parochial schools without such a requirement.

Adeyemo gave Ducey until the middle of next week to explain how the state will “remediate the issues.” He said his agency can demand the money back if the state doesn’t fix the problem.

Ducey said he is doing nothing wrong.

“It’s going to schools that follow the law,” he said Friday. He was referring to a state law, approved by the Republican-controlled Legislature earlier this year, that forbids schools from imposing mask mandates.

Only thing is, that law did not take effect as scheduled on Sept. 29. A trial judge voided it after finding it was illegally enacted as part of the state budget.

“It’s going through the courts,” Ducey said. A hearing is set for Tuesday, Nov. 2, before the Arizona Supreme Court.

Even assuming the justices allow the state law to be enforced, that would not affect the strings the federal government put on the money and what Treasury says is the requirement that Arizona comply or forfeit the cash.

At issue is Arizona’s share of a $350 billion program in state and local relief dollars to deal with COVID.

Adeyemo said the program is designed to “mitigate the fiscal effects stemming from the COVID-19 public health emergency,” which includes supporting efforts to stop the spread of the virus.

What the governor has done, Adeyemo said, is discourage schools from following health protocols that are designed to contain the virus. He said that is “not a permissible use” of the federal money.

Ducey on Friday took a swat at the Biden administration over the issue.

“The federal administration seems to continue to want to focus on masks,” he said. “We’re going to continue to focus on catching our kids up.”

He sidestepped a question of how providing financial incentives to schools so they do not require masks meets the goal of helping to stop COVID’s spread.

“What we’re doing is we’re incenting parents to get their children in a classroom where they can learn,” Ducey said. “And we’re giving them a choice.”

“That’s what we’re focused on. We’re catching our kids up.”

He declined Friday to say how he intends to try to persuade Adeyemo that his use of the money complies with federal law.

“You’ll see the letter,” Ducey said.

The feds may have the upper hand.

Adeyemo’s letter reminded Ducey that, before receiving nearly $2.1 billion of COVID relief funds, the governor signed a certification that Arizona would use all the money it received in compliance with the federal law and any regulations issued by the Treasury Department. Those limit use of the dollars to responding to the public health emergency and its negative economic impacts, he said.

The spat with Treasury may not be the only problem for Arizona and the efforts of Ducey and Republican lawmakers to keep schools from requiring masks.

The U.S. Department of Education has launched civil rights investigations into six Republican-run states that have laws on the books forbidding schools from imposing mask mandates. Those laws may violate the rights of students with disabilities, the department said. It said it is keeping an eye on Arizona, where the state law is on hold pending Supreme Court action.

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