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Biden administration threatens to recover Arizona Covid funds for school mask policies

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U.S. First Lady Jill Biden talks to people during a tour of a COVID-19 vaccination site at Isaac Middle School in Phoenix, Arizona on June 30, 2021.

Carolyn Kaster | Swimming pool | Reuters

The Biden administration on Friday threatened to rescind millions of dollars in federal aid for coronavirus for Arizona, accusing the state of using the funds to undermine efforts to stop the spread of the virus.

Republican Gov. Doug Ducey’s office has 60 days to change two federally subsidized state school programs for a total of $ 173 million, or redirect the money to “eligible uses,” the Treasury Department said in a letter.

The programs impose conditions that discourage compliance with the use of masks in schools, contradicting the guidelines of the Centers for Disease Control and Prevention on how to reduce the transmission of Covid, according to the letter.

If Arizona fails or refuses to comply with Treasury demands, the Biden administration can recover that stimulus money and withhold a second tranche of pandemic relief funding, Treasury said.

Ducey’s office did not immediately respond to CNBC’s request for comment on the letter.

The disputed federal funds come from the local and state coronavirus tax recovery fund program, or SLFRF, a $ 350 billion share of the $ 1 billion Covid relief package, dubbed the U.S. Rescue Plan, which President Joe Biden signed last year.

The funds are intended “to mitigate the fiscal effects of COVID-19’s public health emergency, including by supporting efforts to stop the spread of the virus,” the Treasury said in a letter to the Planning Office. Ducey’s Strategy and Budget.

But both Arizona school programs use federal money to “impose conditions on participating in or accepting a service that undermines efforts to stop the spread of COVID-19 and discourage compliance with evidence-based solutions to stop the spread of COVID-19 COVID-19 “. said the letter.

The $ 163 million additional education grant program, for example, allows funding only for schools that do not meet the mask requirements, Treasury wrote.

The other $ 10 million program in question offers grants to help parents move their children out of schools that are deemed to be imposing “unnecessary school closures and mandates.”

This program “is only available to families if the current or previous student’s school requires the use of masquerades” during the school day, the Treasury letter said.

The latest letter, sent by Acting Deputy Director of Compliance Kathleen Victorino of the Treasury Office of Recovery Programs, follows months back and forth between the Biden administration and the Grand Canyon state.

The Treasury Department in October had asked Arizona to explain how it would solve the problems identified in the two school programs.

The state responded a month later, detailing its justification for the anti-mask conditions, but did not “describe any plan to address the issues identified,” Victorino wrote.

The latest fight for Covid security rules comes as the highly transmissible omicron variant fuels an unprecedented increase in cases. The U.S. Supreme Court on Thursday blocked the application of the Biden administration rule for employees of large companies to be vaccinated or receive weekly tests, but the high court left a vaccination warrant for health workers intact. .

But disputes precede omicron. Last year, the Arizona Republican-controlled legislature tried to pass provisions banning Covid’s mask warrants and other security measures. In November, the state Supreme Court ruled that these measures were approved illegally.

CNBC’s Tom Franck contributed to this report.

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