Apr 1, 2020

CARES Act Provides for Emergency School Funding -- With a Catch

By Paul H. Green, Esq.

The federal “Coronavirus Aid, Relief and Economic Security Act” (the “CARES Act”) signed into law last Friday provides for an “Education Stabilization Fund” of $30.75 billion, to be distributed through the U.S. Department of Education to “prevent, prepare for and respond to coronavirus.” $13.5 billion of that amount is earmarked for elementary and secondary school emergency relief. New Jersey anticipates receiving $310 million to assist local school districts in transitioning to remote learning, $69 million in emergency relief funding for the districts hardest hit by coronavirus, and another $1.15 million from the National Endowment for the Arts and the National Endowment for the Humanities.

The stabilization aid, however, has a large string attached to it. Section 18006 of the CARES Act provides that:

A local educational agency, State, institution of higher education, or other entity that receives funds under “Education Stabilization Fund”, shall to the greatest extent practicable, continue to pay its employees and contractors during the period of any disruptions or closures related to coronavirus.

Any school district which elects to receive the federal emergency stabilization aid should therefore strongly consider to continue paying its employees and contractors. Districts which have furloughed or intend to furlough employees or cease paying contractors may wish to analyze the amount of potential additional aid they might receive compared to the cost of paying furloughed employees and contractors.

The National School Transportation Association is taking credit for this provision of the Act. School transportation contractors are concerned about the ability to remain solvent and retain drivers in an industry where a driver shortage already exists, and the industry has been encouraging states to mandate that districts continue to pay their transportation contractors. Many New Jersey school districts, concerned about the availability of transportation once schools return to physical attendance, have been agreeing to continue to pay on the condition that contractors supply certified payrolls proving they are paying their drivers. Some districts are also demanding a reduction in the payment for the amount contractors are not expending on fuel and maintenance during the shutdown.

Any school district which is considering accepting the federal emergency aid should review with its legal counsel the implications of doing so in light of the statutory language.

For any questions related to this new legislation or related issues, please contact the school law attorneys at Schenck Price.

DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.

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