Treasury may take back millions from Arizona education fund over condition barring mask mandates

The Treasury Department says Arizona's mask mandate ban harms efforts to stop COVID-19 spread

The Biden administration informed the state of Arizona Friday it must stop withholding federal funding from schools with mask mandates or the department may take back over $160 million of coronavirus relief money the state designated for schools

The Treasury Department issued the warning amid an ongoing feud between Arizona Gov. Doug Ducey's administration and the White House over Arizona's ban on mask requirements for schools. That included a probe the Department of Education launched last year into Arizona and other states that banned masking in schools. 

"By discouraging families and school districts from following this guidance, the conditions referenced above undermine efforts to stop the spread of COVID-19," a letter from the Treasury Department says. "Accordingly, these school programs as currently structured are ineligible uses of SLFRF funds."

FILE - In this April 15, 2021, file photo, Arizona Republican Gov. Doug Ducey speaks during a bill signing in Phoenix. The Arizona Supreme Court is set to release its decision, Thursday, Aug. 19, 2021, in a constitutional challenge to a new tax on high earners that was designed to increase school funding and approved by the state’s voters in November. Ducey opposed the new tax and said he hopes the state's high court finds it unconstitutional. (AP Photo/Ross D. Franklin, File)

In this April 15, 2021, file photo, Arizona Republican Gov. Doug Ducey speaks during a bill signing in Phoenix. (AP Photo/Ross D. Franklin, File) (AP Newsroom)


SLFRF refers to the Coronavirus State and Local Fiscal Recovery Funds that were authorized as part of the American Rescue Plan bill Biden signed earlier this year. The department also said it may withhold future finding from the state. 

Last summer, Ducey created a $163 million grant fund for schools using the federal dollars. But schools that mandate masks for students are not eligible for the money. The Treasury Department said Friday that the governor must either remove that condition or redirect the funding. 

"Failure to take either step within sixty (60) calendar days may result in Treasury initiating an action to recoup SLFRF funds used in violation of the eligible uses," the letter said. "Treasury may also withhold funds from the State of Arizona’s second tranche installment of SLFRF funds until Treasury receives information that confirms that the issues described above have been adequately addressed."

Biden delivers remarks from the White House

President Biden delivers remarks on the debt ceiling during an event in the State Dining Room of the White House, Monday, Oct. 4, in Washington. (AP Photo/Evan Vucci / AP Newsroom)


The Treasury Department said it would be justified to take back the money because the express purpose of the funds "is to mitigate the fiscal effects stemming from the COVID-19 public health emergency, including by supporting efforts to stop the spread of the virus." 

The Treasury Department cited CDC recommendations for "universal masking" for students and staff in schools to reduce COVID-19 spread. 

Ducey hit back at the Biden administration Friday, arguing that the letter shows the president's priorities don't match those of Americans. 

U.S. Treasury Secretary Janet Yellen

U.S. Treasury Secretary Janet Yellen waits for the beginning of a hearing before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill Nov. 30, 2021, in Washington, D.C.  (Alex Wong/Getty Images / Getty Images)


"First, a failed attempt to mandate vaccines. Then, a complete disregard for the public safety and humanitarian crisis at the southern border," the governor said in a tweet thread. 

"Now, attempting to rewrite rules around public dollars that will result in LESS funding to schools and kids — particularly in low-income communities," he continued. "When it comes to education, President Biden wants to continue focusing on masks. In Arizona, we’re going to focus on math and getting kids caught up after a year of learning loss."

Fox News' Emma Colton and Sam Dorman contributed to this report.