The US Treasury Department has told Arizona’s Republican governor to abolish two programs aimed at discouraging school mask mandates within 60 days, or give back over $1 billion in federal Covid-19 relief and forfeit the rest.

The Biden administration is taking issue with Arizona’s Education Plus-Up Grant Program, which offered $163 million in funding to schools in the state, but made districts that require masking ineligible.

Another initiative, dubbed the Educational Recovery Benefit Program, offers up to $7,000 in school vouchers to parents if their child’s school requires masks or quarantining after exposure to the virus. Federal guidance says masks must be worn at all times by schoolchildren, in order to prevent the spread of Covid-19.

“By discouraging families and school districts from following this guidance, the conditions referenced above undermine efforts to stop the spread of [Covid]-19,” Treasury’s Deputy Chief Compliance Officer Kathleen Victorino said in a letter that was made public on Friday. “Accordingly, these school programs as currently structured are ineligible uses” of funds provided under the American Rescue Plan, President Joe Biden’s March 2021 relief bill.

Arizona has reportedly received about half of the $4.2 billion from the bill, and is due for the rest in April. Not only did Victorino require Arizona to abolish the two programs within 60 days or face paying back the money already received, she said that “Treasury may also withhold funds from the state of Arizona’s second tranche installment of ARP funds until Treasury receives information that confirms that the issues described above have been adequately addressed.”

Governor Doug Ducey’s chief of staff, Daniel Ruiz, said that Phoenix only found out about the letter from news reports.

“We think that this program is above board,” Ruiz told AP. “We’re going to defend that program and any other future program that is designed to get kids caught back up and mitigate the learning loss” due to school closures and remote learning since the pandemic began.

Ruiz added that the governor intends to “challenge at every level in terms of court proceedings any attempt by them to retroactively change policies or rules.”

Ducey introduced another $10 million program last week, offering school vouchers to parents whose children’s schools close even for one day due to Covid-19. The Arizona Republic newspaper described it as “largely a pre-emptive effort,” since there have been no school closures in the state since the start of the year.