Ducey's programs to discourage COVID-19 mandates in schools violate funding rules, feds say

Gov. Doug Ducey's programs that reward school districts for not imposing COVID-19 related mandates violate federal rules, and U.S. Treasury officials warned Tuesday that they may claw back federal stimulus dollars unless the state makes changes.

Before Arizona received an initial $2 billion payment from the American Rescue Plan, the state agreed to follow spending terms that included combatting "fiscal effects stemming from the COVID-19 public health emergency, including by supporting efforts to stop the spread of the virus," the Treasury Department's second-in-command wrote in a letter to Ducey on Tuesday.

But two programs announced by Ducey in August "undermine evidence-based efforts" to stop the coronavirus and are "not a permissible use" of the money, the letter reads. At least $173 million was set aside for those programs.

Those programs allocated up to $7,000 for families who want to move their children from schools that mandated masks or other COVID-19 precautions, and gave $1,800 per student to districts that did not impose mandates such as requiring quarantines for unvaccinated students.

The state has distributed at least $109 million of the $163 million available to school districts, according to information from the Governor's Office. Another $10 million was earmarked for vouchers for families, though it's unclear how much of that was spent so far.

Federal Treasury officials gave Ducey 30 days to "remediate the issues" with those programs. The penalty for not doing so could include Arizona having to repay federal dollars it received, according to the Treasury letter signed by Deputy Secretary Adewale "Wally" O. Adeyemo.

Ducey, a Republican, has defended the programs, saying they did not prevent COVID safety protocols but allowed families to have a say in how their children learned inside of Arizona's classrooms.

In an email on Tuesday, Ducey spokesperson C.J. Karamargin said the Governor's Office was reviewing Treasury's letter and "will respond."

On Twitter, Ducey wrote, "Here in Arizona, we trust families to make decisions that are best for their children. It’s clear that President Biden doesn’t feel the same. He’s focused on taking power away from American families by issuing restrictive and dictatorial mandates for his own political gain."

The $7,000 voucher program for families could pay for tuition, childcare, transportation and other purposes. Ducey earmarked $10 million for the vouchers, and within the first few weeks, demand for the program outpaced the money available.

Democrats support Treasury action

U.S. Rep. Greg Stanton, a Democrat, asked Treasury Secretary Janet Yellen to issue an opinion about the programs in August, the same day Ducey publicly announced his plans for the money. Stanton represents Arizona's 9th District, which includes parts of Central Phoenix and the East Valley.

“Congress passed the American Rescue Plan to strengthen our economy and keep people safe — to slow the spread of this deadly virus and get the pandemic under control," Stanton said in a statement Tuesday.

"Our intent — and the plain language of the law — is the direct opposite of what Governor Ducey has proposed. He’s aiming to subsidize the spread of COVID-19, and the people who are going to be hurt are our kids."

State schools Superintendent Kathy Hoffman has previously said Ducey's programs punished schools that were keeping children safe.

“As has been much of Arizona's approach to COVID-19 under Gov. Ducey's leadership, misusing federal funds to help families avoid COVID mitigation in schools was shortsighted and harmful," Hoffman said in a Tuesday statement.

Treasury's intervention follows months of back-and-forth debate over public health protocols in Arizona schools, and a prior warning from federal education officials that Ducey's use of funding was not allowed.

The Legislature tucked provisions into its annual budget law that prohibited mask and other mandates, but those laws were put on hold by a judge before they could take effect in late September.

The court ruling has been appealed, however, leaving schools, millions in funding and thousands of families in limbo. Ducey said last week he would continue to fund the programs despite the court order. 

His spokesperson did not answer a question about how Treasury's intervention would immediately affect the education funding initiatives.

Masks help prevent school outbreaks

As politicians debated putting public health or parental choice first, cases in classrooms climbed. 

In late August, Maricopa County health officials warned that outbreaks in schools more than doubled each week since the academic year began. A September analysis by Arizona State University researchers found schools in Maricopa and Pima counties without a mask mandate were 3.5 times more likely to have a COVID-19 outbreak.

As of Tuesday, 1,071 childcare centers, daycares and schools had COVID-19 cases, according to state health officials.

While children are less likely to get severely ill or die from COVID, they are not immune.

More than 1.1 million Arizonans have tested positive for COVID since the pandemic began, and people ages 20 and under make up 20% of those positive tests, according to the state health department.

Staff writer Yana Kunichoff contributed to this story.

Reach reporter Stacey Barchenger at stacey.barchenger@gannett.com or 480-416-5669. Follow her on Twitter.

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