On June 26, 2025, the U.S. Department of Education (ED) reversed its March 28 decision to end the liquidation period for certain federal grant programs. ED directed all states and outlying areas to resume liquidating previously approved Education Stabilization Fund (ESF) and Elementary and Secondary School Emergency Relief (ESSER) funds. This shift follows court injunctions and is intended to provide fair, consistent access to pandemic relief funds to all states.1
Definitions
Liquidation period – Per 2 CFR Section 200.344, for most federal grants, the liquidation period is the term for the 90-day period after the end of the period of performance for a grant that the Uniform Guidance allows grant recipients to liquidate all financial obligations incurred under a federal award.
Obligation period – A federal obligation is a legal liability to disburse funds within the period defined by the federal granting agency.
Original Liquidation Periods
- Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
- Education Stabilization Fund (ESF): Liquidation period ended January 28, 2023
- Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA Act)
- ESF funds: Ended January 29, 2024
- American Rescue Plan Act (ARP Act)
- ESF funds: Ended January 28, 2025
- ESSER and ARP Homeless funds: Fully obligated by September 30, 2024
- ESSER funds: Late liquidation period remains March 30, 2026
The default federal liquidation period is 120 days after the obligation period ends, but ED has authority under 2 CFR §200.344(c) to grant up to 14 additional months for liquidation upon request and approval.
Key Developments
- On March 28, 2025, Secretary Linda McMahon notified states that all prior extensions for ESF and ESSER liquidation would end immediately, moving the deadline to March 28, 2025, at 5 p.m. ET. Only project-specific extensions could be considered after this.2
- On May 6 and June 3, 2025, the U.S. District Court for the Southern District of New York issued preliminary injunctions in New York et al. v. Department of Education, blocking ED from enforcing the March 28 revocation against 16 plaintiff states and the District of Columbia. This allowed those states to continue liquidating funds under previously approved extensions, while other states remained restricted.
- In response to the injunctions and to maintain fairness, ED’s June 26 letter allows all states and outlying areas with preapproved late liquidation requests (as of March 28, 2025) to submit reimbursement or payment requests for their ESF and ESSER programs during the litigation period.3
- States must follow the same procedures as before March 28, 2025, submitting required documentation for each project or program to the appropriate ED program office.
- ED has released a detailed FAQ and continues to update its guidance on the late liquidation process.4
Our team is monitoring the funding and can help impacted entities with funding questions and next steps. For further inquiries or assistance, please reach out to a professional at Forvis Mazars.