As the federal fiscal year begins today, Oct. 1, 2025, I want to provide you with information about how the federal government shutdown could impact our school districts and schools.
While it is not possible to provide certainty, it appears that most of the major formula funding streams to our public school units will continue during this shutdown and that federal support services and new initiatives will be severely limited.
Please note that this information is subject to change as additional information is made available.
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Elementary and Secondary Education Act, IDEA, and Perkins
As you know, most funding from the United States Department of Education (USDOE) for K-12 education flows to state educational agencies (SEAs) and then local education agencies (LEAs) by formula, through such programs as Elementary and Secondary Education Act (ESEA) Title I-A (grants to LEAs), Title II-A (Supporting Effective Instruction), Title III (English Language Acquisition), Title IV-A (Student Support and Academic Enrichment) and Title IV-B (21st Century Community Learning Centers), as well as Individuals with Disabilities Education Act (IDEA) Part B (Special Education — Grants to States) and Career and Technical Education (CTE) state grants.
We received a portion of the Title I-A and II-A grant funds on July 1, 2025, with the remaining funds to be distributed on Oct. 1, 2025. CTE funds have been transitioned to the Department of Labor. We have received the grant award for a portion of the CTE awards and have been notified that the remaining funds will be available on Oct. 6.
Depending on the program, some or all of the program’s funding is appropriated on a “forward funded” basis, meaning that the funding becomes available for SEAs beginning on July 1 of the fiscal year. In addition, a portion of the funding for four programs (ESEA Titles I-A and II-A, IDEA Part B and CTE) is appropriated on an “advance-funded” basis, meaning that the money does not become available until Oct. 1 of the following fiscal year. In other words, the fiscal year 2025 advance-funded money would become available on Oct. 1, 2025.
The Council of Chief State School Officers (CCSSO), of which I am a member, confirmed with USDOE staff just prior to the shutdown that, barring any prohibitive legislation, fiscal year 2025 formula funds should be made available on Oct. 1, even in the event of a federal shutdown. CCSSO noted that if an action requires federal staff involvement or decision-making, those actions likely cannot continue during a shutdown. Among the formula programs, one program that could be affected by a shutdown, particularly protracted one, is Impact Aid, federal funding that goes directly to LEAs with a military base or Native American lands. This is funded on a “current-year” basis, with these funds becoming available to eligible LEAs from the beginning until the end of the fiscal year. (For example, the period of availability for FY 2025 is Oct. 1, 2024, through Sept. 30, 2025.)
Based on this information, I would ordinarily feel comfortable that we will receive the formula funds as we typically do. While the USDOE Secretary of Education Linda McMahon noted in a memo with the United States Office of Management and Budget, dated Sept. 28, 2025, that the USDOE will make Title I and IDEA grant funding available as usual and that states, schools, and other grantees will continue to be able to access funds from the billions of dollars in recent awards the USDOE made over the summer, we have to be prepared for circumstances to be different with this federal administration. As we experienced earlier this summer, the administration withheld certain formula funds that were previously appropriated by Congress, and Secretary McMahon’s memo does not explicitly state what is to happen with formula funding other than Title I and IDEA.
Grants and other activities
Secretary McMahon’s memo also noted that the following will stop during a federal government shutdown:
- New Grant Activities: The USDOE will cease all new grantmaking activities.
- Civil Rights Investigations: The Office for Civil Rights will pause review and investigation of complaints.
- Technical Assistance: Development of guidance, technical assistance, and regulatory actions will pause unless required for funded activities.
McMahon’s memo also noted that the USDOE plans to furlough approximately 95% of non-Federal Student Aid staff during the first week of a shutdown. Only essential staff needed for exempt or excepted functions will remain. After one week, staffing may increase slightly but is not expected to exceed 5% of total employees.
School meals
Child nutrition programs, including school lunch, breakfast and snack programs, are reimbursed during the month following the end of each service month. CCSSO has shared that an official at the U.S. Department of Agriculture (USDA) confirmed with the CCSSO that the agency typically has funding on hand for three months of school meals following a shutdown, and USDA is unlikely to issue any guidance on school meals until closer to that three-month mark. In response, our School Nutrition Office has taken proactive steps to secure funding to cover your September meals (typically reimbursed after Oct. 10). Should the shutdown continue after these funds are exhausted, there may be delays in processing your October claims (which are normally reimbursed after Nov. 10).
Key takeaways
As noted above, while it is not possible to provide certainty, it appears that most of the major formula funding streams to our public school units will continue during this shutdown and that federal support services and new initiatives will be severely limited.
Our team here at the Department of Public Instruction and I will continue monitoring this situation closely and will provide updates as we receive additional guidance from federal agencies.
Thank you for your continued leadership in serving North Carolina’s students.
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