Federal Funding Freeze and Potential Impacts

Yesterday, the White House budget office announced a federal funding freeze. AASA is continuing to seek more information on this announcement, but at this time our understanding is that for formula funding all districts received their FY24 funds on either July 1 or October 1 and it is with them and cannot be withheld. Similar to when the government shuts down, the funds that could be impacted are Impact Aid, Head Start and school meals as those are disbursed closer to “real time.” We are seeking information as to whether those payments are paused (we believe they could be) but have not received confirmation.

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.