By Hailey Konnath

Law360 (July 7, 2020, 10:22 PM EDT ) A coalition led by California and Michigan sued the U.S. Department of Education and Secretary Betsy DeVos in California federal court on Tuesday, challenging a new rule they say would unfairly inhibit public schools' abilities to access federal COVID-19 relief funding.

The rule, issued July 1, requires federal coronavirus relief funds be distributed based on the number of students in any private school that wish to participate, and that equitable services must be provided to all students enrolled, even those from affluent families, according to the complaint.

The regulation not only contradicts the plain language of the coronavirus relief legislation but could also mean that public schools serving low-income students would receive less money while that funding is diverted to their private school peers, the complaint says. And it violates the Administrative Procedure Act and the U.S. Constitution, according to the coalition of states, including Maine, New Mexico, Wisconsin and the District of Columbia.

DeVos' reinterpretation of the law "will deprive low-income and at-risk students, their teachers and the public schools that serve them of critical resources to meet students' educational and social-emotional needs during and after pandemic-related school closures," the states and D.C. say in the suit.

Their suit urges a California federal judge to order the department and DeVos to abandon the rule.

California Attorney General Xavier Becerra said in a statement on Tuesday that Congress set clear parameters on how to spend the COVID-19 aid money.

"Again and again, the Trump administration takes action to steal from the poor and give to the rich," Becerra said. "Whether it's President [Donald] Trump or Secretary DeVos, we won't stand by when the education of our children or the rule of law is under threat."

Michigan Attorney General Dana Nessel said in a separate statement that DeVos is using the public health crisis as "another opportunity to advance her personal privatization agenda."

"At a time when Michigan schools are facing an unprecedented crisis, every single child deserves the chance to succeed," she said. "But, yet again, Secretary DeVos has decided to tip the scales in favor of private schools, leaving the state's public-school students behind."

Meanwhile, Department of Education press secretary Angela Morabito said in another statement that the department doesn't comment on pending litigation. That said, DeVos has reiterated that the pandemic affected all students, and the coronavirus relief legislation requires that funding be used to help all students, Morabito said.

"There is no reasonable explanation for debating the use of federal funding to serve both public and private K-12 students when federal funding, including CARES Act funding, flows to both public and private higher education institutions," she said.

Under the Coronavirus Aid, Relief and Economic Security Act, which was signed into law in late March, the agency is required to allocate funding to help schools prevent, prepare and respond to the pandemic, according to Tuesday's suit. As part of the legislation, Congress established a formula for the distribution of $13.2 billion in aid for K-12 schools nationwide, according to the states and D.C. That money is given to state education agencies to distribute to individual schools.

The law requires that funding be doled out in line with Title I of the Elementary and Secondary Education Act, the coalition said, adding that Title I funds are generally aimed at helping children from low-income families. Those children often include children with disabilities, migrant children, English language learners, foster care and juvenile justice system children and homeless children, they said.

The legislation also says that private schools should only be eligible for funds in certain circumstances in line with Title I criteria, they said.

DeVos' interim final rule "blows up the legislated mechanism" and requires the inclusion of private schools based on the total population they serve as opposed to income, as Congress instructed, Becerra's office said in a statement. And that leaves the poorest school districts with less, it said.

The states and D.C. claim the Department of Education and DeVos have unlawfully exceeded their authority, undermined Congressional intent and failed to justify the decision.

In California alone, the rule means tens of millions of dollars could be diverted from taxpayer-funded public schools in the state's poorest districts, according to Becerra's office.

Tony Thurmond, California's state superintendent of public instruction, said in the statement that it is "unconscionable to divert funds from the students who need these resources the most."

"This pandemic has exacerbated the inequities that impact our most vulnerable students, and our public schools need every last dollar to safely and effectively resume learning," he said.

And in Michigan, that means about $16 million will be diverted from public schools to private ones, according to Nessel's office.

Michigan's State Superintendent Michael Rice said in the statement that DeVos has manufactured a choice of formulas for local school districts, an option that doesn't exist in the coronavirus relief legislation.

"This is unacceptable, particularly in the midst of a pandemic and given a significant decline in state revenue," Rice said.

DeVos has also been sued over guidance blocking coronavirus aid for foreign students. Last month, a California federal judge temporarily blocked that rule, finding that it is likely unconstitutional. 

The states and the District of Columbia are represented by Michael Newman, Sarah E. Belton, Rebekah A. Fretz, James F. Zahradka II and Garrett M. Lindsey of the California Attorney General's Office, Toni L. Harris and Neil Giovanatti of the Michigan Department of Attorney General, Kathleen Konopka, Brendan B. Downes and Nicole Hill of the Office of the Attorney General for the District of Columbia, Sarah A. Forster of the Maine Attorney General's Office, P. Cholla Khoury and Lisa Giandomenico of the New Mexico Attorney General's Office and Hannah S. Jurss of the Wisconsin Department of Justice.

Counsel information for DeVos and the Department of Education wasn't immediately available.

The case is State of Michigan et al. v. Betsy DeVos et al., case number 3:20-cv-04478, in the U.S. District Court for the Northern District of California.

--Additional reporting by Suzanne Monyak. Editing by Nicole Bleier.

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