Vermont’s failure to meet mandatory federal reporting requirements for schools could soon cost the state’s Agency of Education $100,000.

The U.S. Department of Education last week chastised state officials for a “significant violation” of the Every Student Succeeds Act, a federal law that requires states to report annually about each school’s performance in exchange for federal aid to districts with large numbers of low-income students and English language learners. In response to the violation, federal officials said they would move to withhold administrative funds from the agency and instead redirect them to schools.

Vermont’s annual grant under the law was first placed on “high risk status” in July when the state did not identify schools that needed extra supports using data from the 2021-22 school year, according to a letter sent Friday from federal officials to the state agency.

In September, state officials assured federal officials that they had published local report cards and identified schools that were underperforming, as required. But in November, the agency acknowledged that while it had identified schools requiring comprehensive support, as required by the law, it had not identified those that needed more targeted help.

“Failing to identify schools … more than a full year after identifications should have occurred, is a significant violation of the ESEA,” Adam Schott, the Deputy Assistant Secretary for Policy and Programs at the U.S. Department of Education, wrote in his Friday letter. “A State accountability system provides useful information to school leaders, educators, parents, and stakeholders; supports informed decisions about programs and services; and helps allocate resources to support student needs, including for historically underserved student groups.”

No one was available from the Agency of Education for an interview on Monday. But in an email, agency spokesperson Lindsey Hedges blamed the pandemic for the state’s failure to meet reporting requirements.

“We want to ensure Vermont is in full compliance moving forward and will engage in the state plan amendment process required to do that,” she wrote. Hedges also emphasized that the $100,000 in administrative funds being withheld by the federal government was being redirected to schools, not going back to Washington, D.C.

But in his Friday missive to the state, Schott appeared to have little patience for the argument that the pandemic should let Vermont off the hook.

“While we understand that restarting the accountability system and identifying schools following the COVID-19 pandemic posed unexpected challenges, (the agency’s) extended delays raise significant concerns,” he wrote.

The federal government allowed states to submit one-time Covid-10 waivers to modify their plan for identifying schools under the law. But federal officials noted that while Vermont submitted such a waiver – and received approval for it – that modified plan changed the indicators the state could use to identify schools, not the requirement that schools be identified.

Vermont was the only state to see the federal government clawback funds for failing to identify schools during the 2021-22 school year, according to a spokesperson with the U.S. Department of Education.

The material impact of this penalty is not large – $100,000 is ultimately a rounding error in Vermont’s state budget. But Jay Nichols, the executive director of the Vermont Principals’ Association, said he’s worried that the Agency’s failures could eventually imperil the much larger pot of money that flows to schools through the law.

Many educators are critical of the federal law that requires states to publicly identify schools that are underperforming. But Nichols said those regulations are “the law of the land today.”

And he noted that Friday’s letter was not a first warning, but rather the most recent of “many requests” and “many directives” to comply.

The Agency of Education was hollowed out in the wake of the Great Recession. And in recent years, local school officials have grown increasingly vocal about an agency they argue is of little help and struggling to perform basic tasks.

For Nichols, this is only further evidence the agency is “not as functional as it needs to be.”

“This stuff can’t be happening,” he said. “This is not a good look for Vermont.”

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