Washington (CNN)The US Treasury Department warned Arizona Friday that it's at risk of losing some of its federal Covid-19 relief funds because two of its grant programs prioritize schools that don't require children to wear masks.
If Arizona does not make changes to those programs within 60 days, the Treasury Department could start recouping the funds that are being spent in violation of eligible uses, according to a letter sent to Gov. Doug Ducey's office.
One program Treasury officials have concerns about is the $163 million Education Plus-Up Grant Program, which awards money to Arizona schools that do not require the use of masks and are open for in-person learning.
The other is the state's Covid-19 Educational Recovery Benefit Program, which is available only to families of students whose current or prior school requires the use of masks. It's meant to provide up to $7,000 per student whose parents are facing financial and educational barriers due to mask mandates and "unnecessary closures," according to a state website.
The conditions imposed on these grants "undermine efforts to stop the spread of Covid-19 and discourage compliance with evidence-based solutions for stopping the spread of Covid-19," the Treasury Department letter said.
Ducey signed a ban on school mask mandates into law in June, but it was ruled unconstitutional by a state judge in September -- a decision later upheld by the Arizona Supreme Court. Some schools had chosen to defy the governor and implement a mask mandate even before the judge's ruling.
The US Centers for Disease Control and Prevention continues to recommend indoor masking in K-12 schools for students, teachers and staff, regardless of vaccination status.
A spokesman for the governor's office did not immediately respond to a request for comment.
The federal money in dispute was authorized by the $1.9 trillion American Rescue Plan, which President Joe Biden signed into law in March. The relief package created a $350 billion Coronavirus State and Local Fiscal Recovery Funds program that sent state, local and tribal governments a pot of money to support their responses to the pandemic.
The money can be used for a wide range of expenses, including providing a boost in pay to essential workers, helping small businesses recover from the pandemic and replacing lost public sector revenue.
The American Rescue Plan also sent $128 billion directly to school districts. Much of that money is still available and schools have more than three years to spend it. Staffing, summer learning and after-school programs, HVAC systems, mental health programs and technology to aid remote learning are some of the top priorities, according to a review of state spending plans by FutureED, a nonpartisan think tank at Georgetown University.