UPDATED: Federal Funding Freeze and Potential Impacts

Yesterday, the White House budget office announced a federal funding freeze via a memo from the Office of Management and Budget. 

UPDATED 9:00am 1/29/25

Latest: A federal judge has temporarily blocked the funding freeze. The administrative stay will be in place until February 3. Another court hearing is scheduled that morning to consider the issue.

FIRST: Federal fiscal year 2025 is what we are living in today, January 28, 2025. It started October 1, 2024 and runs through September 30, 2025. Federal FY25 dollars will be in schools for the 2025-26 school year. Schools today, are spending federal FY24 dollars (generally speaking) in their schools.

Our initial blog post indicated that federal formula funds (like IDEA and Title I) are forward-funded and would not be impacted. That remains true. We want to clarify that while states are fully allocated their forward funded programs on July 1 and October 1, the actual drawing down for these funds is continual throughout the year. That said, the FY24 funds currently in play for schools for the 24-25 school year will not be impacted.

Our initial blog post indicated that impacted programs COULD include Impact Aid and Head Start. We have been able to confirm that those programs will not be part of the full roll out of the final impoundment. A Q&A from the Office of Management and Budget (OMB) explicitly stated that Head Start is exempted from the freeze. 

Regarding Impact Aid we have confirmed that the next payment for Impact Aid will be when FY25 funding is completed, currently the date is March 14th unless there’s a shutdown or another delay. That means that there is no money currently at play that districts cannot access or are due from the Department of Education regarding Impact Aid. If the freeze continues through March 14th then Impact Aid could be caught in a potential freeze. Read statement from NAFIS here. 

ORIGINAL SECTION

Yesterday’s announcement includes a lot of information without a lot of specifics and is certain to face both Congressional and court challenge. Given the very unique approach of the proposal, we can’t, with the information the president has released, have any certainty on what it will mean for FY25. That said, we do have some context on broader appropriations and historical application of the Impoundment Act. The next paragraph is subject to change as more detail comes from the administration and/or if they move forward with their sweeping proposal:

Because Title I, etc. are forward funded, districts  would not be in receipt of any FY25 funds before July of 2025 and we expect that when Congress passes the CR for FY25 later this spring those dollars will go out on time. In contrast, any competitive grants awarded by any agency (ED, USDA, DOJ, Energy, etc.) will be affected by this federal funding freeze; however, most of the FY24 dollars were already competed and in accounts for disbursement so it’s unlikely that they will be problematic. If districts were anticipating applying for new grant funding those grant competitions are currently paused.

We will continue to be available to answer questions and address concerns as the situation evolves.