The State of K–12 Education Federal Funding: What Leaders Need to Know Now to Prepare for the Future

The news today often feels like a never-ending deluge of emerging information and uncertainty about the future of federal K–12 education funding. At the same time, nearly every district in the U.S. is in budget planning season. It’s hard for superintendents, program leaders, and school board members to know where to put their dollars next year with so many unknowns clouding the future.

The news today often feels like a never-ending deluge of emerging information and uncertainty about the future of federal K–12 education funding. At the same time, nearly every district in the U.S. is in budget planning season. It’s hard for superintendents, program leaders, and school board members to know where to put their dollars next year with so many unknowns clouding the future.

This article summarizes what we know about the state of federal funding as of its writing and offers actionable steps that education leaders can take to prepare themselves and their districts for changes in funding and compliance.

Where Federal Education Funding Stands Today

Though much remains unclear about the future of federal funding for K–12 education, district leaders and board members can be sure of these three things as they prepare for the 2025–26 school year.

1. Federal funding for K–12 education remains in place for the moment, with caveats

A continuing resolution (CR) signed in March ensures that most federal programs will largely retain Congressionally-directed funding at fiscal year 2024 (FY2024) levels at least until September 30, 2025. This includes Title I grants to local educational agencies, Title IV-A: Student Support and Academic Enrichment Grants, 21st Century Community Learning Center, and more. (See the Committee for Education Funding for the full list of programs.)

However, CRs do not include exact spending levels for every program like a typical annual appropriations bill does. This detail opens the door for the administration to shift funds away from some programs towards those it wishes to prioritize without seeking Congressional input (EducationCounsel).

For example, the total FY2024 appropriation for Individuals with Disabilities Education Act (IDEA) carried over in the CR is $15.467 billion. However, the CR does not require the U.S. Department of Education to follow the explicit funding directives spelled out in the FY2024 Explanatory statement for specific programs under IDEA, such as $39 million for state personnel development and $33 million for parent information centers.

The administration’s proposed federal budget for FY2026, released in early May, aims to slash more than $4.5 billion in K–12 funding, particularly from initiatives like the Teacher Quality Partnerships grant, the English Language Acquisition program, and the Office for Civil Rights. At the same time, the proposed budget maintains current funding for other programs, but alters their organization into single grants to enable states to spend as they see fit (more on this change in a moment). One area of increase in the budget request is an additional $60 million for charter schools, which aligns with the administration’s desire to increase school options and expand parental choice.

The proposed budget reflects this administration’s oft-cited desire to dismantle the Department of Education. Ultimately, Congress retains final authority on defining appropriations for federal funding, and with Republicans holding a majority, many of these cuts and changes to K–12 federal funding may appear in the finalized budget for FY2026. Until then, FY2025 education spending will remain in place.

Federal funds will be released July 1, 2025, either according to FY2026 appropriations spending (if Congress successfully finalizes before then) or the CR.

Bottom Line: Thanks to the CR, education leaders can feel somewhat confident about the federal funding available for the coming school year and will likely not need to make immediate, dramatic changes to programs or staffing. However, educators must closely watch as Congress reviews and finalizes FY2026 appropriations, paying particular attention to funding that the administration seeks to cut. Additionally, both state and federal actions that seek to give states more authority over distributing federal dollars could further affect this landscape, as we discuss below.

2. State authority is a top priority for this administration

The current administration has made it clear that it wants state education departments to have more authority to spend federal funding as they see fit. This change will mean states have to carry more decision-making weight when it comes to how federal dollars are allocated to support education—as well as more responsibility for reporting and compliance.

Governors in several states, including Iowa and Oklahoma, have already submitted proposals to the U.S. Department of Education requesting to receive their federal education dollars as a consolidated block grant. This would give these states even more flexibility to allocate funds to the programs and initiatives they want to prioritize and reduce what many see as burdensome reporting and compliance requirements that come with the existing formula grant process for funding state education.

Further, the administration’s proposed federal budget for FY2026 seeks to reorganize funding for Title I and special education programs as separate single grants for state education departments to manage.

Additionally, layoffs at the federal level mean that states will have access to less data about student performance, effective programs, and evidence-based practices. States will therefore need to develop and fund their own data collection requirements and research studies to inform decisions about investing funds for the greatest impact.

Bottom Line: More autonomy is coming to states, bringing both ambiguity and opportunity to reimagine education funding systems and processes. At this moment, districts should engage with state education leaders to:

• Communicate their priorities for student learning
• Share which of programs and initiatives currently funded by federal formula grants are most benefit their communities
• Offer innovative ideas to improve teaching, assessments, and learning
• Collaboratively develop changes to compliance and regulations that would help educators truly advance student outcomes

3. Districts face additional budget strains beyond federal funding uncertainty

Proposed cuts to federal education funding are not the only changes that may add strain to district budgets in the coming school year. Chief among these are:

• Possible reductions in non-education funding, such as Medicaid, often used to fill gaps in paying for important services, like those for students with disabilities through IDEA (EdWeek, AASA) and for mental health.
• Economists’ warnings of a wider global recession and the ripple effect of the administration’s tariffs (EdWeek, K12Dive), both of which are already impacting schools’ spending and bottom lines.
• Layoffs at the U.S. Department of Education, which are delaying its fulfillment of state funding requests through ESSER, EANS, and GEER (EdWeek) and will likely cause more delays in other funding processes

Bottom Line: School boards and districts need to have a clear understanding of all their current funding streams, which programs they each cover, and what the potential consequences would be should any of those funding sources increase, decrease, or be eliminated.

How to Prepare for the Future

In the face of so much uncertainty, it is extremely difficult for education leaders to make solid decisions about their budget for the 2025–26 school year and beyond. And yet, students will return to the classrooms in the fall regardless of the state of education funding.

With that in mind, district leaders, school boards, and federal program managers have an opportunity to act now to prepare for potentially major changes to funding later.

Plan for hard but informed conversations and choices

Details aside, changes to school funding are coming, and they will force hard decisions in districts across the country. Leaders must stay informed about both what’s happening at the federal level and, more importantly, in their respective states regarding funding for education.

Additionally, leaders must clearly and precisely understand which of their expenditures are delivering the results they want for student learning and how. With budgets at risk of shrinking, districts need to know the return on instruction to determine which programs stay, which ones go, and which ones may need to shift from one funding source to another.

Tell a compelling story about how your dollars impact student learning

Complementing this urgency to measure the true value of dollars spent, districts and school boards need to craft a compelling story for their state leaders and constituents about their funding streams and associated programs, especially those with a demonstrable impact on student learning.

For example, a district could share how funding programs that serve unhoused students today will ultimately save the state money in the future. Such programs help students graduate ready for college and career, ensuring they can contribute to the local community and economy as thriving adults.

When powered by both quantitative and qualitative data, these stories illuminate the true impact of education investments and can guide legislators and state education agency officials to make informed decisions about funding those programs that drive student achievement forward.

Your Return On Instruction Matters Now More Than Ever

During this time when unknowns outnumber the knowns, it’s easy to feel paralyzed. However, by examining all of your districts’ investments and understanding their impact on student learning, you will be better positioned to take informed action around your budget, whatever and whenever changes to funding occur.

Level Data’s Return on Instruction (ROI) platform brings participation, performance, and funding data from all your systems into one place, making it easy to correlate student outcomes with dollars spent on everything from professional learning and tutoring to edtech. By illuminating the financial impact of your programs and tools on student achievement, ROI helps you make the right fiscal decisions to best serve your students.

Request a demo of ROI today to see how we can help your district navigate the changes ahead. 

DISCLAIMER: Information shared in this article is current as of its publication date.