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Federal Report
Good news, bad news on federal funding
July 27, 2026
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The following report was prepared by John Schilling, Ed.D., President of the Council of Elementary Educational Leaders and liaison for the National Association of Elementary School Principals and the California Federal Relations Coordinator for NAESP. Congress continues to move the FY27 appropriations process forward, with both positive and negative developments.
House appropriations
The House Appropriations Committee approved its FY27 Labor-HHS-Education funding bill on a 34–28 party-line vote. On the positive side, the committee rejected the White House proposal to consolidate numerous education programs into a block grant. The committee also provided modest funding increases for several education programs, including:
  • IDEA State Grants (+$35 Million)
  • Charter Schools (+$60 Million)
  • Head Start and Early Childhood Education (+$10 Million)
  • GEAR UP (+$6 Million)
  • TRIO (+$6 Million)
  • Impact Aid (+$5 Million)
  • Indian Education (+$4 Million)
The committee also rejected the White House budget request to eliminate Student Academic Enrichment State Grants (Title IV-A) and After-School Learning Activities (Title IV-B).
Unfortunately, there were also some negative developments: The committee cut Title I Grants to LEAs funding by approximately 10 percent (-$1.89 billion). The committee also eliminated funding for:
  • Professional Development State Grants-Title II-Part A (-$2.19 Billion)
  • English Language Acquisition Grants-Title III (-$890 Million)
  • Preschool Development Grants (-$315 Million)
  • Teacher and School Leader Incentive Grants (-$60 Million)
  • Full-Service Community Schools (-$150 Million)
These reductions remain deeply concerning and present challenges ahead.

Action alert: Administrators are encouraged to voice their support for robust FY27 funding and reject education cuts for federal Pre-K–12 education programs by sending their representative a short email.
Senate appropriations
The Senate continues to draft its version of the FY27 appropriations bill. While no funding figures have been released, early indications from the committee are not encouraging.
This year, they do not appear to be on the same page on funding priorities or levels, including education. Congress will likely require one or more Continuing Resolutions to prevent a government shutdown when the fiscal year begins on Oct. 1.
A final FY27 funding bill isn’t expected to be completed until a lame duck session after the November mid-term elections.
Action alert: As the Senate Appropriations Committee finalizes its funding recommendations, administrators should contact their Senate Appropriators and urge them to protect and strengthen federal Pre-K–12 education investments.
FY26 formula funds
The Department of Education intends to release FY26 formula funds on schedule by July 1.
The Department of Education is making changes to its grants management system, which could result in technical glitches that could affect certain programs or states, but all appears to be proceeding smoothly.
The second bundle of funding will go out on Oct. 1.
The Department of Education learned important lessons about the local consequences of even temporary delays based on the formula funding they withheld for weeks last summer.
Special education transition to Health & Human Services
In June, U.S. Department of Education Secretary Linda McMahon announced that special education programs would move to the Department of Health and Human Services. It’s the latest of a series of interagency agreements that have shifted program operations out of the Department of Education to other cabinet agencies. Special education was the last major K–12 program still housed within the Department of Education.
There is bipartisan concern in Congress about this move. Senate HELP Committee Chairman Bill Cassidy (R-LA) and Senate Appropriations Committee Chairwoman Susan Collins (R-Maine) have signaled their disfavor of it. The transition is not expected to take effect until July 2027.
Online safety legislation The House passed the Kids Internet and Digital Safety (KIDS) Act. The bill would:
  • Require online platforms and device manufacturers to strengthen safety features and parental controls.
  • Establish new age verification requirements.
  • Require AI chatbots to disclose to minors that they are interacting with artificial intelligence.
Senator Ted Cruz is developing separate Senate legislation known as the Kids Online Safety Act (KOSA) which is focused on online child safety. Congress continues to move quickly in response to growing public concern about children's online safety.
FCC and E-Rate The Federal Communications Commission (FCC) plans to conduct a comprehensive review of the E-Rate program, examining both its original design and long-term implementation.
The review will evaluate:
  • How the program distributes funding.
  • Whether higher-poverty schools continue to receive appropriate support.
  • The program's long-term future.
There is concern that this comprehensive review is part of a FCC plan to sunset the program. Eliminating E-Rate would significantly reduce schools' abilities to provide essential 21st-century connectivity and technology services.
The FCC will open a formal comment period in the near future to get public input on these issues. NAESP will submit comments and will encourage affiliates and members to do likewise. State flexibility waivers Indiana received approval for a federal flexibility waiver under the Elementary and Secondary Education Act (ESEA).
The waiver allows the Indiana Department of Education to consolidate state-level federal funding across:
  • Title I, Part B
  • Title II, Part A
  • Title III, Part A
  • Title IV, Part A
  • Title IV, Part B
The waiver also establishes a pilot program that allows 15 percent of Indiana school districts to consolidate their Title II-A and Title IV-A funds.
Indiana also received flexibility from several federal accountability requirements, allowing the state to use multiple measures of student achievement, including tests like the PSAT, ACT, and AP.
Vermont also received approval for a federal flexibility waiver. The waiver allows the state to consolidate state-level federal funding:
  • Title II, Part A (Supporting Effective Instruction)
  • Title IV, Part A (Student Support and Academic Enrichment)
  • Title IV, Part B (21st Century Community Learning Centers)
These waivers will primarily affect state administration of federal funds and are not expected to change how local school districts receive funding.
Additional state flexibility waivers are expected over the coming year.
Department of Labor President Donald Trump nominated Keith Sonderling to serve as Secretary of Labor. Sonderling has served as Acting Secretary following the departure of Lori Chavez-DeRemer and has led the department during her absence.