Recently a teacher asked why graded material that was marked as excused was highlighted when applying the needs grading filter in the view menu. Schoology explained that this was the intended behavior.
"The Excused exception is the equivalent of leaving the gradebook cell blank and simply serves as a visual reminder to the course admin that the student has been excused, which helps avoid later confusion as to why the cell for that student is blank. The Needs Grading highlight view in the gradebook highlights all cells with past-due gradebook items that still need a grade. In this case, the Needs Grading filter will still highlight things that are marked Excused since they meet the qualifications for highlighting: past-due and no grade entered."
It stands to reason that once material is marked excused, the teacher is not expecting the student to submit. The material does not "still need a grade". It has been excused from grading and shouldn't appear in the needs grading filter.