The Biden administration is threatening to recoup millions of dollars in Covid-19 relief funds from Arizona because the state has been discouraging families from following federal guidance that recommends wearing masks in schools.

Arizona’s Republican governor, Doug Ducey, has been at odds with the Biden administration for months over the use of the aid funds. Other Republican governors across the country have also been trying to use the funding for measures – such as tax cuts – that are not related to the pandemic and are not authorized under the terms of the grants.

Two Arizona state programs meant to help schools and students have been directing funding away from jurisdictions with mask requirements. The state’s Education Plus-Up Grant Program provides $163m in funding to schools, but districts that require face coverings are ineligible. And its Covid-19 Educational Recovery Benefit Program provides for up to $7,000 to help parents leave school districts that require children to wear face coverings.

The program has had few takers, despite Ducey’s office touting it as a response to an outcry from parents. As of last week, only 85 students were getting the vouchers and less than $600,000 of the $10m had been allocated.

Also last week, the governor created a third program that is likely to run afoul of treasury department spending rules. It is another $10m school voucher program for parents whose children’s schools close for even one day after 2 January because of Covid.

The treasury department warned in a letter on Friday that the state has 60 days to remove the anti-masking provisions before the federal government moves to recover the relief money, and it threatened to withhold the next tranche of aid as well.

The Centers for Disease Control and Prevention (CDC) recommends universal mask-wearing in school settings 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,” the treasury department wrote. “Accordingly, these school programs as currently structured are ineligible uses of (Coronavirus State and Local Fiscal Recovery Funds).”

“Treasury may also withhold funds from the state of Arizona’s second tranche installment of (American Rescue Plan) funds until Treasury receives information that confirms that the issues described above have been adequately addressed,” the letter from Deputy Chief Compliance Officer Kathleen Victorino reads.

Arizona has already received about half of the $4.2bn awarded to the state under the 2021 coronavirus relief bill. The next tranche is due in spring.

According to local media reports, Daniel Ruiz, Ducey’s chief of staff, said the governor’s office would “make sure that we can support (the programs) at a financial level, and we will challenge at every level in terms of court proceedings any attempt by them to retroactively change policies or rules.”

Ruiz added that the governor’s office heard first about the letter through media reports, and accused the Biden administration of poor communication.