KingSpry | Contractual Guidelines for ESSERS Funding

What Are the Contractual Guidelines for ESSERS Funding?

Posted on May 10th, 2021
by Jonathan M. Huerta

In order to provide support and aid to school districts across the country amid the ongoing pandemic, Congress is allocating funds to schools and districts to address the impact COVID-19 had, and continues to have, on elementary and secondary schools. 

More than a year ago, on March 27, 2020, The U.S. Department of Education passed the $2 trillion CARES Act, and within that, about $30.75 billion was allocated to the Education Stabilization Fund. Out of the $30.75 billion, $13.2 billion was distributed to the Elementary and Secondary Emergency Relief (ESSER) Funds.

Then, on December 27, 2020, Congress passed a second COVID Relief Bill, the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA). The CRRSAA allocated an additional $54.3 billion for the second round of ESSER funds (ESSER II). 

Finally on March 11, 2021, Congress passed the American Rescue Plan Act, which provided an additional $122.7 billion for ESSER funds (ESSER III). Specifically, Pennsylvania received $523,807,198 from ESSER I, $2,224,964,030 from ESSER II, and $4,996,953,151 from ESSER III.

State educational agencies (SEA) will be awarded grants to provide local educational agencies, i.e. school districts, with funds to address the impact COVID-19 continues to have on elementary and secondary schools. Grants are provided to SEAs in the same way as they are under Part A of Title I of the Elementary and Secondary Education Act of 1965. If a school district did not receive a Title I, Part A subgrant from the 2019-2020 school year, then the school district is not eligible to received ESSER funds. SEAs must use at least 90% of the ESSER fund grant as subgrants for school districts and may keep the remaining 10% to address any emergency needs resulting from COVID. Additionally, from this 10%, SEAs may save ½ of 1% or less of their total allocation for administrative costs.

School districts will start to receive funds between April and June 2021 and will be available through September 2022.

ESSER funds must also be awarded within one year of their state allocation, and if there are funds left over after the one-year deadline, they must be returned to the U.S. Department of Education to be redistributed following the guides of the CARES Act. ESSER II funds are available through September 30, 2023 and are also subject to the one-year deadline. 

It is important to note that ESSER II funds may not be used until ESSER I funds have been spent. While these funds are issued using the same formula as Title I, the Title I restrictions do not apply, and ESSER funds must be awarded and tracked apart from Title I funds. 

A school district may use ESSER funds for reasonable educational expenses, such as activities necessary to maintain schools’ operations and services, providing resources to school leaders to address individual school needs; training and professional development for school staff on mitigation and sanitary efforts; purchasing supplies to sanitize and clean schools; implementation of summer learning after school programs, or organization of any response efforts to COVID, etc. Additionally, funds may be spent on costs incurred between March 13, 2020 and September 2022. 

Generally speaking, the permitted uses for ESSER, ESSER II, and ESSER III are the same, there are some distinctions regarding the time period each respective funds are available for application, equitable services to non-public schools, and reporting of usages and efforts to measure the damages incurred over COVID-19.

Additionally, school districts must reserve at least 20% of their allocated ESSER III funds to address learning loss by implemented intervention to ensure students’ social, emotional, and academic needs are addressed, as well as the disproportionate impact COVOID-19 has on underrepresented students. States must use all ESSER I funds before tapping into the ESSER II funds as well. The U.S. Department of Education stated a school district may not use the funds on bonuses, merit pay, or similar expenditures, unless related to COVID response plans (i.e. closures); subsidizing or offsetting executive salaries and benefits of individuals who are not a school district employee; or expenditures related to state or local teacher/faculty unions.  Under Section 18003(d) of the Elementary and Secondary Education Act is a broad list of the permissible uses of ESSER Funds.

A school district must file a local application with a SEA in order to receive a subgrant and may use their ESSER funds to support any school in their district regardless of a school’s Title I status, but school districts should greatly consider targeting their funds based on poverty, school needs, and other targeting measures. 

Bottom Line for Schools

States and school districts have the responsibility to use these funds in order to address the hardships faced over the past year due to COVID. The Secretary of Education emphasized investing in technology and eLearning systems as well as professional development and training to help all students while they continue to navigate forms of remote learning. 

Additionally, school districts should focus on addressing the needs of students with disabilities, English learners, and underprivileged or low-income students.  For example, providing online learning technology for all students, continuing to provide meals to eligible students, creating programs to meet IDEA requirements for students with disabilities, or planning and implementing summer learning or after school program activities. 

That said, it is important to keep in mind that federal funding requires compliance under 2 C.F.R. § 200, specifically the inclusion of certain contractual provisions found in Appendix II of the regulation. For example, contract in excess of $2,000 must include a provision in compliance with the Davis-Bacon Act, in which school districts must pay worker wages at rates not less than what is specified by the U.S. Department of Labor.  

For more information, here are some helpful links:


If you have a question, please contact your legal counsel or one of the Education attorneys at KingSpry.


School Law Bullets are a publication of KingSpry’s Education Law Practice Group. John E. Freund, III, is our editor. This article is meant to be informational and does not constitute legal advice.