Appropriations Update: What to consider as you budget for the next school year

Congress is back in DC with a hyperfocus on Fiscal Year (FY) 2026 spending as the January 30^th deadline to fund the federal government looms. The latest update: in late December, the House and Senate Appropriations Committee chairs announced they had agreed on funding totals for the nine remaining bills, including Labor, Health and Human Services, Education (LHHS). Although the actual numbers remain unknown, leadership has indicated that FY2026 funding will be below the FY2025 level – and FY2025 was basically at the FY2024 level.

Congress is making progress on overall appropriations, with three additional negotiated bills announced this week, but the LHHS bill remains unfinished. Although LHHS is typically among the last to be completed, Chairman Tom Cole has indicated he hopes to finalize it later this month, raising the possibility that education funding could be completed by the January 30 deadline rather than requiring another continuing resolution.

As Congress continues to debate spending, we recognize that superintendents across the country are working on their own budgets for the 26-27 school year without knowing what money they can expect from the federal government. While final outcomes are far from settled, there are several planning considerations worth keeping in mind:

1) FY2026 funding levels are not yet a done deal. As we have previously shared, the current FY2026 House proposal includes drastic cuts to K-12 education that, if enacted, would significantly harm districts nationwide (more on the House proposal here). At this point in time, it is unlikely that these cuts have enough support to pass the Senate and become law, but maintaining pressure on appropriators remains critical to protecting core federal formula funding. 

2) Timely allocations matter as much as totals. Even if FY26 appropriations ultimately land close to level funding, districts should prepare for the possibility of a delayed release of funds. After the Administration’s temporary withholding of FY25 funds and, in light of recent actions to move key agency roles and activities (like calculating the state formulas) away from staff at the Department of Education, the threat of delayed funds remains acute. Congress is currently negotiating language to require the Administration to distribute FY26 funds on time and in full, but it is unclear whether this language has enough bipartisan support to make it in the final package. Absent that mandate, districts should not assume they will have access to federal funding on July 1. Prudent fiscal planning may include maintaining sufficient carryover to manage potential summer cash flow gaps. 

(The AASA Advocacy Team developed a toolkit to help superintendents reach out to their members of Congress to advocate for protecting education funding and specifically asking for the July 1 guarantee language. Access it here.) 

3) Policy conditions may accompany funding. District leaders should remain alert to the possibility that Grant Award Notices (GANs) could be used to advance policy interpretations that conflict with state law, circuit precedent, or longstanding federal practice. Such conditions could create difficult choices, legal uncertainty, and delays in access even when funds are technically available. 

This is a moment of uncertainty that requires careful planning.  Budget modeling should include contingencies, and communication with boards and communities should reflect realism, not alarm. Advocacy with your congressional delegations remains as important now as ever. 

Federal education funding is not yet settled and superintendent voices, individually and together, matter a great deal in shaping what comes next.