ESSER II Funds: Practical Considerations and Federal Procurement Methods

The U.S. Department of Education has awarded Elementary and Secondary School Emergency Relief (ESSER) II funds as part of the Coronavirus Response and Relief Supplemental Appropriations Act. Many school officials have asked us how they can spend those funds.

MDE, the pass-through entity and funds gatekeeper, issued a memorandum dated February 24, 2021, enumerating the allowable uses of ESSER II funds. Notably, those allowable uses include all the uses permitted for ESSER I funds and further include the following:

  • Addressing learning loss among students, including low-income students of the school, children with disabilities, English learners, ra­cial and ethnic minorities, students experienc­ing homelessness and children and youth in foster care, by:

(A)  Administering and using high-quality assessments that are valid and reliable to accurately assess students’ academic pro­gress and assist educators in meeting stu­dents’ academic needs, including through differentiating instruction;

(B)  Implementing evidence-based activities to meet the comprehensive needs of students;

(C)  Providing information and assistance to parents and families on how they can effec­tively support students, including in a distance learning environment; and

(D)  Tracking student attendance and improving student engagement in distance education.

  • School facility repairs and improvements to enable operation of schools to reduce risk of vi­rus transmission and exposure to environmen­tal health hazards and to support student health needs.
  • Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, includ­ing mechanical and non-mechanical heating, ventilation, and air conditioning systems, filter­ing, purification and other air cleaning, fans, control systems, and window and door repair and replacement.

Schools may use remaining ESSER I funds for the above uses as well. Despite the same permissible uses for ESSER I and II, schools must audit and track those funds separately.

Schools may use ESSER I and II funds for pre-award costs dating back to March 13, 2020. U.S. Department of Education guidance requires ESSER I funds to be spent by September 30, 2021, and ESSER II funds by Septem­ber 30, 2022. The Tydings Amendment, however, extends each period for an additional year.

ESSER funds are subject to all federal regulations that apply to federal grant awards. Using ESSER funds triggers legal obligations for procuring supplies, mate­rials, equipment, and services. Notably, purchased ser­vices, which generally are not subject to Michigan’s competitive bidding requirements, do trigger federal procurement methods when using federal funds. Fed­eral procurement must comply with one of the five methods described in the Uniform Guidance federal regulations:

  • Micro-Purchases (Up to $10,000*). When the aggregate dollar amount of supplies or services does not exceed the micro-purchase threshold of $10,000 (*or other board-established amount up to the annually scheduled state threshold amount for materials and labor — currently $25,288), school officials may award ESSER-funded contracts without soliciting competitive price or rate quotations if they consider the price to be reasonable based on research, expe­rience, purchase history, or other information.
  • Small Purchases (Between $10,001 and $250,000). When the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold ($250,000), school officials must ob­tain price or rate quotations “from an adequate number of qualified sources.” The term ade­quate generally requires complying with board policy and reaching out to at least three vendors for quotations. School officials must document those quotations.
  • Sealed Bids ($250,001 and above). When the aggregate dollar amount is higher than the sim­plified acquisition threshold ($250,000), the Uniform Guidance requires one of two “formal procurement methods” – a sealed bids or re­quest for proposals approach. The first formal procurement method is by sealed bids, in which bids are publicly solicited from an adequate number of vendors and a firm fixed-price con­tract (lump sum or unit price) is awarded to the lowest responsive and responsible bidder. Us­ing sealed bids is “the preferred method for pro­curing construction” under the federal regulations.
  • Requests for Proposals ($250,001 and above). The second formal procurement method involves requests for proposals, in which either a fixed price or cost-reimburse­ment type contract is awarded. The school must have a written policy for conducting technical evaluations of the proposals received and se­lecting the recipient. The contract is awarded to the responsible offeror whose proposal is most advantageous to the school, considering price and other factors.
  • Noncompetitive Procurement. Noncompeti­tive procurement, without obtaining quotations or bids, is available only if one or more of the following apply:
    • For the acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold;
    • The item is available only from a single source;
    • The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
    • The U.S. Department of Education or MDE expressly authorizes a noncompetitive pro­curement in response to a written request from the school; or
    • After solicitation of a number of sources, competition is determined inadequate.

Note, however, that state bid laws still apply and often impose stricter requirements, particularly for construction. Also, when spending ESSER funds, certain specific contractual provisions must be included in each contract (including any provisions required by the Davis-Bacon Act). Your Thrun Law Firm transactional attorney can help you ensure those provisions are included in the applicable contracts.

We will keep you apprised of future developments regarding ESSER funds, including the requirements for the forthcoming ESSER III funds.