Case File: ED cannot decide how to allocate CARES Act funds to nonpublic schools

The U.S. Department of Education created a rule that established a specific funding formula districts should use when allocating CARES Act funds to nonpublic schools— but a U.S. District Court has ruled that ED was outside its authority.
By: | August 25, 2020
Photo by Bill Oxford on UnsplashPhoto by Bill Oxford on Unsplash

School districts leaders in need of CARES Act funding learned this summer that a specific portion of funds would have to go to nonpublic schools. According to a district court ruling,  the U.S. Department of Education can’t make that requirement.

Case name: State of Washington v. DeVos

Ruling: In a strongly worded opinion, the U.S. District Court, Western District of Washington held that the U.S. Education Department had neither the authority nor the discretion to decide how to allocate the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, funding to nonpublic schools. It granted the State of Washington’s request to enter a preliminary injunction barring ED from enforcing an interim final rule, which calculated funding amounts based on total enrollment rather than using the income-based formula found in Section 1117 of the Elementary and Secondary Education Act of 1965.

What it means: A federal agency’s authority is generally given to it by laws passed by Congress and is limited by the language of those laws. A court will likely prevent or overturn an agency’s actions if those actions go outside the agency’s authority. In this case, ED created a rule that established a specific funding formula districts should use when allocating CARES Act funds to nonpublic schools. However, because it was clear from the language of the CARES Act which funding formula districts were supposed to use, ED couldn’t change that formula because it was outside its authority.

Summary: The U.S. Education Department likely overstepped its rulemaking authority when drafting an interim final rule that altered the funding formula districts must use when determining how to allocate CARES Act funds to nonpublic schools. Noting that the language of the CARES Act “plainly” detailed which funding formula to use “without equivocation,” and that ED’s interim final rule went against the “very purpose of the CARES Act,” the U.S. District Court, Western District of Washington granted the State of Washington’s request to prohibit ED from enforcing its interim final rule.

In its lawsuit against ED, the state argued, among other claims, that ED overstepped its rulemaking authority as a federal agency by misconstruing the language of the CARES Act and creating a rule that “effectively divert[ed] emergency relief funding from economically disadvantaged public schools to less disadvantaged private schools.” According to the state, the CARES Act required ED to use the poverty-based formula found in Section 1117 of the ESEA, which required districts to allocate funds to nonpublic schools using a formula based on the percentage of students from low-income families who attend a nonpublic school.

ED, on the other hand, asserted that while the CARES Act didn’t explicitly give it discretion to determine which formula to use, under its general rulemaking authority, it was permitted to determine that funding should be allocated based on total enrollment in nonpublic schools. However, the court emphasized that the language of the CARES Act “could hardly be less ambiguous.” The court noted that the CARES Act instructed ED to allocate funds “in the same manner as provided under Section 1117 of the ESEA of 1965 to students and teachers in nonpublic schools.”

Thus, because the language of the CARES Act clearly did not provide ED with discretion with regard to which funding formula it could use, the court concluded that ED overstepped its authority when creating the interim final rule and ordered ED not to enforce it.

Dylan Wade, Esq., covers education legal issues for a DA sister publication.