Friday was a day of threats by the Biden Administration to withdraw millions of dollars of federal coronavirus funding for Arizona. They accuse the state of using those funds to hinder efforts against the spread.

Republican Governor Doug Ducey has 60 days for his office to make changes to two federally funded state school programs, totaling $173million. Or redirect the money towards “eligible uses”, according the Treasury Department in a written statement.

According to the letter, these programs discourage students from wearing masks at school, which is contrary to the Centers for Disease Control and Prevention’s guidance on how to decrease Covid transmission.

Treasury warned that Arizona may not comply or fail to respond to Treasury’s requests and could withhold funding for a second round of pandemic aid.

CNBC did not receive a response from Ducey’s offices immediately to its request for comment.

Federal funds at issue are from the Coronavirus State & Local Fiscal Recovery Funds program or SLFRF. This $350 billion portion of the multitrillion-dollar Covid relief plan, also known as the American Rescue Plan (or the American Rescue Plan), was provided by the President Joe Biden signed into law last year.

Treasury wrote to Ducey’s Office of Strategic Planning and Budgeting to note that funds will be used “to reduce the fiscal impacts stemming form the COVID-19 health emergency,” and also to support efforts to end the spread of the disease.

The letter stated that Arizona’s school programs used federal funds to “impose conditions upon participating or accepting a service which undermine efforts to prevent the spread COVID-19” and to discourage compliance with evidence-based strategies to stop its spread.

It $163 million Education Plus-Up Grant ProgramTreasury said that the law allows money to be granted only to schools that don’t enforce requirements such as masking.

It other program in questionThe grant, which is worth $10 million, helps parents to move their children out of schools that have been deemed unnecessary closings or school mandates.

Treasury wrote that the program is only available to students whose school or previous school required the use of facial coverings during school hours.

Kathleen Victorino, acting Chief Compliance Officer of the Treasury Office of Recovery Programs sent the latest letter following months of back and forth between the Biden administrations and Grand Canyon State.

In October, Arizona was asked by the Treasury Department to describe how it would resolve the issues in its two school programs.

Victorino wrote that the state replied a month later. It explained its reasoning for anti-mask conditions, but failed to describe any remediation plans.

Covid’s safety rules are under attack as the high- transmissible variant of Omicron is fueling a new round of cases. Although the U.S. Supreme Court ruled against the Biden Administration’s directive that large employees must be vaccinated, or undergo weekly testing, it left the mandate to vaccinate health-care workers intact.

However, disputes are always ahead of omicron. Last year, Arizona’s Republican-controlled legislature tried to pass provisions banning mask mandates and other Covid safety measures. The state Supreme Court was established in November. ruled that those measures were passed illegally.

— This report was contributed by Tom Franck, CNBC.