Nessel wins preliminary injunction to suspend CARES Act rule pushed by DeVos

A federal judge has agreed to temporarily stop an unlawful rule implemented by U.S. Department of Education Secretary Betsy DeVos that would allow federal COVID-19 response funding to be siphoned away from K-12 public schools, Michigan Attorney General Dana Nessel announced today.

The decision by Judge James Donato, of the U.S. District Court Northern District of California, is an early victory for a coalition of states and school districts, of which Michigan has partnered with California to lead. The coalition filed suit on July 7 against DeVos and her department for issuing a rule that would unfairly limit the ability of public schools to use federal funds provided under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Judge Donato late Wednesday granted a preliminary injunction sought by the coalition prohibiting the department from enforcing its rule until a decision on the merits of the case can be rendered. 

In his order, Donato found that the coalition is likely to succeed on the merits of its case because, contrary to Secretary DeVos’ argument that the CARES Act language is ambiguous, Congress used language that is “familiar and uncomplicated, to say the least.”  As a result, Donato wondered, “how could anyone maintain with a straight face” that the CARES Act language is unclear?  

“We are pleased with the Court’s decision and will continue to fight against the unlawful approach taken by Secretary DeVos to redirect pandemic relief money from public schools to serve her own political agenda,” Nessel said. “By Congress’ own design, that money was meant to assist the nation’s public schools that are most in need of financial support, but Secretary DeVos’ unlawful rule does the exact opposite. The fight to protect our public schools will continue until every dollar of the CARES Act funding goes to support the places that Congress intended.”

Gov. Gretchen Whitmer joined Nessel in filing the suit against DeVos and the Department of Education.

“This is good news for our kids, our educators and families in districts who need this funding most,” said Gov. Whitmer. “CARES Act dollars are designed to provide support to districts in low-income areas. Betsy DeVos’ rule would have stripped dollars away from schools in need of critical funding. She doesn’t share our priorities for protecting and improving public education. I will continue to work closely with Attorney General Nessel to protect our students, educators, and support staff and ensure CARES Act funding is used to support schools in low-income communities.”

In his ruling, Donato cited evidence submitted by the State of Michigan that it planned to reserve about $5.1 million in Elementary and Secondary School Emergency Relief (ESSER) funds for private schools, according to calculations that Congress outlined in the CARES Act. However, the rule pushed by DeVos would require it to divert more than $21.6 million to private schools. 
“Losing (nearly $16.5 million) of federal funding to private schools would be the equivalent of laying off 466 teachers from public schools in Flint, Michigan,” Donato wrote.

He added that as much as 33 percent of Grand Rapids’ total ESSER funding would be sent to private schools under one option provided for in the rule. 

“The Court’s task in evaluating this evidence was made considerably easier by the fact that the department does not meaningfully dispute it,” Donato wrote in his opinion. “Counsel for the department forthrightly acknowledged at the hearing that plaintiffs would sustain measurable financial and budgetary hardships under the rule.”

In the decision, the Court noted:

• Congress' intent in the CARES Act was “plain as day” that funds must be distributed based on the proportion of low-income students and not total population;

• The U.S. Department of Education's interpretation of the CARES Act was “'interpretive jiggery-pokery' in the extreme;”

• Plaintiffs clearly demonstrated a likelihood of irreparable harm and that the U.S. Department of Education did not meaningfully dispute that assertion; and

• The balance of hardships weighs in plaintiffs' favor, particularly in light of the fact that private schools have had access to additional funding under the Paycheck Protection Program.

In filing for the preliminary injunction Attorney General Nessel and California Attorney General Xavier Becerra were joined by the attorneys general of Hawaii, Maine, Maryland, New Mexico, Pennsylvania, Wisconsin, and the District of Columbia, as well as the City School District for the City of New York, Chicago Board of Education, Cleveland Municipal School District Board of Education, and the San Francisco Unified School District.