Pago Pago, AMERICAN SAMOA — While ASDOE can now breathe a sigh of relief for projects that were previously extended (ensuring those can be completed and paid for), the 14 projects that failed to win extension approval are still frozen out. And, unless the USDOE grants the appeals or otherwise revisits its May 8 determinations, American Samoa cannot use ARPA funds for those disqualified initiatives or projects. It may also have to pay back the ARPA monies it has already used to pay out expenses for those projects that are now disqualified.

As it stands, essentially, the territory has regained what it had prior to March 28 – no more, no less.

US Secretary of Education, Linda  McMahon’s latest letter, dated June 26, 2025, reversing USDOE’s policy, explicitly limited the relief to “previously approved ... projects or programs as of March 28, 2025.” By definition, projects that were not approved by that date (and subsequently denied) do not fall under the umbrella of restored funding authority.

By definition, the ASDOE’s disqualified projects laid out in a letter, dated May 8, 2025, signed by Principal Deputy Assistant Secretary and Acting Assistant Secretary of OESE, Hayley B. Sanon do not fall under the umbrella of restored funding authority.

The May 8th letter outlined each of the 14 projects, the amount of funds requested to be liquidated, requested liquidation extension date, and the reason for denial. They amount to $38- 42 million in disqualified projects, and are currently on appeal.

It should be noted that the USDOE has signaled that appeals will require strong evidence that the projects “directly mitigate” COVID’s educational effects – a high bar for construction projects.

Denial of ARPA funding for the 14 ASDOE projects were basically cited as not providing “direct academic services to students that address learning loss” or “does not directly provide academic services to students”.

And, unless the federal stance softens, American Samoa may have to either find alternative funding for those capital projects or forego them, which local officials warn could hamper long-term recovery efforts.

What Happens If a Disqualified Project Was Already Underway?

One of the more complex challenges facing the ASDOE involves projects that had already begun — and for which ARPA funds had already been partially disbursed — before they were formally disqualified in the U.S. Department of Education’s May 8th letter.

Under federal grant regulations (2 CFR §200.344 and §200.410–415), expenditures for services rendered before a project is disqualified are not automatically protected. If a project was obligated before the September 30, 2024 deadline, and ASDOE had used ARPA funds to pay vendors or contractors for work completed before May 8, those costs are still subject to federal review.

The USDOE may ultimately determine that those funds must be returned — unless the pending appeal is successful.

During the appeal process, ASDOE is not required to immediately repay those funds. But if the appeal is denied, the USDOE could issue a final determination requiring ASDOE to return the ARPA funds disbursed under the disqualified project, or to absorb the costs with local or non-federal funds.

This puts ASDOE in a precarious position: it has already disbursed funds in good faith for services under projects it believed were eligible — such as architectural design, site preparation, or initial procurement — only to learn that the federal government considers those projects outside the scope of allowable use.

If the Department does not reverse its decision, these early payments could be deemed unallowable, triggering repayment obligations.

Until the appeals are resolved, ASDOE may not make additional ARPA-funded payments related to the disqualified projects.

If the appeals fail, all prior payments — even for work legitimately completed — could be subject to clawback. ASDOE may then need to find alternative funding sources or face audit risks and financial liabilities tied to the misalignment between federal determinations and prior disbursements.

Potential Consequences of a Clawback

If ASDOE’s appeals are unsuccessful and the USDOE upholds its disqualification of the 14 ARPA-funded projects, the financial and operational impact on ASG could be severe. Some of these projects had already begun and received ARPA disbursements before the May 8 denial. Should those expenditures be deemed unallowable, ASG could be required to repay the federal government or absorb the costs through other funding sources.

Such a clawback would have multiple consequences.

Financially — ASG could face the loss of millions of dollars in federal relief funds. Replacing those funds with local revenue would likely require budget reallocations, use of emergency reserves, or legislative appropriations, all within a constrained territorial budget. Contractors and vendors who have already performed work could face payment delays or contract cancellations, leading to potential lawsuits or reputational damage.

From a compliance standpoint — any clawback would likely trigger federal audit findings, including potential citations for failure to ensure proper use of funds. ASG’s future federal grant awards could be placed under heightened monitoring or special conditions, further restricting its flexibility to respond to local needs.

Politically — a clawback could generate public criticism over the management of relief funds and strain ASG’s relationship with federal agencies. It could also undermine the territory’s progress in modernizing school facilities and addressing learning loss — the very goals that ARPA funds were intended to support.

Governor Pula and education officials have made clear that avoiding such an outcome is a priority. They continue to argue that the disqualified projects are essential to the territory’s long-term educational recovery and have urged the federal government to reconsider.

ASDOE Director Maefau Dr. Mary Lauagaia Taufete’e in an official press release, dated May 15, 2025, said that the decision “disregards the unique challenges faced by American Samoa.”

If the appeals are denied, however, ASG will face a difficult decision: return the funds, reclassify the projects under alternate funding sources, or cancel them altogether.

Bottom Line

In the aftermath of months of federal policy reversals and litigation, American Samoa’s leaders are expressing cautious optimism. With the U.S. Department of Education’s June 26 policy shift, ASDOE has regained access to ARPA education funds for projects that had been previously approved for late liquidation. Governor Pula noted that this restoration “helps ensure our students won’t lose out due to circumstances beyond our control,” and thanked the Department for addressing the disparity between plaintiff and non-plaintiff jurisdictions.

At the same time, the territory’s leadership remains focused on the unresolved status of the 14 projects disqualified in the Department’s May 8 letter.

ASDOE is actively compiling supplemental information to support its formal appeal, aiming to demonstrate that capital investments — such as upgraded ventilation systems, safer classroom environments, and digital infrastructure — are essential to mitigating COVID-19 learning loss. Several of these projects had already incurred costs and received ARPA payments prior to disqualification, placing those expenditures at risk of clawback if the appeals fail.

After months of uncertainty, American Samoa has achieved partial relief: it can once again draw on ARPA funds for projects that were already approved and in progress as of March 28.

However, the disqualified initiatives remain off-limits unless the U.S. Department of Education reverses its denial or grants the appeals. If not, ASG may be required to return funds already spent on incomplete disqualified projects, which could strain the territory’s budget and force difficult trade-offs.

While ASG continues to pursue every administrative option available, it may also seek support from Congress or other federal channels to repurpose funds or mitigate the financial fallout.

Until a final decision is made, a substantial portion of ASDOE’s planned recovery efforts remain in limbo, and the territory’s education system must proceed without the full ARPA support originally envisioned.