School Transportation Vendors Claim for Payment Under the CARES Act

We understand that certain transportation vendors are claiming that the recently passed CARES Act requires full or nearly full payment from school districts even if no transportation services are provided during school closures. These vendors are citing CARES Act language requiring districts that receive funds under the Education Stabilization Fund of the CARES Act to continue to pay their employees and contractors, “to the greatest extent practicable,” during the period of any disruptions or closures related to coronavirus disease 2019 (COVID-19).

This language, however, does not require full payment for transportation costs even for school districts to which it may ultimately apply. Accordingly, although many school districts laudably desire to work with transportation vendors during this difficult time, school districts should review their contracts and consult legal counsel before agreeing to any payments based solely on any such interpretation of the CARES Act. We further recommend that if a school district receives a bill from a transportation vendor for services not provided it consider immediately disapproving the bill in writing to ensure compliance with the Local Government Prompt Payment Act.

As we reported in a previous alert, the CARES Act includes a $30 billion Education Stabilization Fund under which school districts may receive financial support in the amount of $13.5 billion. The CARES Act allows the State of Illinois to obtain grant money from the U.S. Department of Education to then provide to school districts, based primarily on each school district’s allocation of Title I.A moneys. Links to the proportion of CARES Act money that ISBE is estimating for each school district under that aspect of the Education Stabilization Fund, as well as ISBE’s summary of that part of the Fund are also available on the ISBE’s webpage on Coronavirus (COVID-19) Updates and Resources. The CARES Act does go on to provide the following, which some contractors are attempting to leverage to support full or nearly full payment for services that are not provided:

• Districts that receive funds under the Education Stabilization Fund must, “to the greatest extent practicable”, continue to pay their employees and contractors during the period of any disruptions or closures related to coronavirus.

This provision cited by contractors, however, in no way mandates a school district that does not receive CARES Act money to pay contractors for work not performed nor does it require a school district that receives money to pay contractors in line with previous bills received by the school district. Further, the meaning of “greatest extent practicable” as used in the Act is unknown at this time. We expect clarification from the U.S. Department of Education and ISBE in the coming months. The CARES Act makes clear and ISBE has amplified that the additional funding is to be used to strengthen infrastructure for remote learning to support student access to technology and for school cleaning and sanitation purposes. Paying transportation contractors is not an articulated  priority of either the CARES Act or the guidance we have seen so far from ISBE.

We urge you to communicate in writing to your transportation vendors to prevent any misunderstandings during this time of uncertainty.

Finally, we are mindful that many school districts desire to work with their contractors to come to a reasonable solution during this difficult time. We have prepared a form agreement for numerous clients that a school district may utilize to address this issue. We encourage school districts to continue to work with their attorney on this significant matter.