Education Funding

The Federal Government Might Shut Down (Yes, Again). Here’s What Schools Need to Know

By Mark Lieberman — September 26, 2023 5 min read
Speaker of the House Kevin McCarthy, R-Calif., is surrounded by reporters looking for updates on plans to fund the government and avert a shutdown, at the Capitol in Washington on Sept. 22, 2023.
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For the second time this year, the federal government is barreling toward a fiscal crisis of its own making. This time, it could lead to a shutdown of operations on Oct. 1. Most schools should largely expect business as usual, though—unless the federal shutdown drags on.

By Oct. 1, Congress needs to approve a new “continuing resolution” that sets federal spending for the next year. House Republicans have been pushing for massive cuts to federal spending, including an 80 percent reduction in the billions of Title I funds that high-need school districts receive. House Democrats, who have pushed to increase funding for that program, in a press release called cuts of that magnitude represent an “assault on education.”

Even beyond partisan squabbles, a schism has opened among Republicans in the House: Far-right lawmakers like Reps. Matt Gaetz, R-Fla., and Marjorie Taylor Greene, R-Ga., have threatened to oust House Speaker Kevin McCarthy, R-Calif., from his leadership post if he collaborates at all with Democrats in an effort to avert the shutdown. Other Republicans would be more open to a bipartisan deal to keep the government operating.

If political tensions don’t ramp down, the federal government will shut down on Sunday, Oct. 1. This shutdown would be the 15th since 1980, the fourth in the 21st century, and the first under President Joe Biden. The last shutdown, under President Donald Trump, was the longest in U.S. history, lasting 35 days in late 2018 and early 2019.

Lawmakers may yet reach a last-minute deal. They managed this past May to narrowly avert what would have been a catastrophic breach of the nation’s debt ceiling.

Previous shutdowns haven’t led to dramatic impacts for most K-12 schools.

But there’s always a possibility of more severe effects if a shutdown drags on—federal funds for school meals and child care services could run out; aid programs that help feed low-income families may shut down; and hundreds of thousands of federal workers, as well as school staff whose positions are funded with federal dollars, will miss paychecks.

Here’s a look at the most likely effects of a federal government shutdown on K-12 schools.

Most federal funding for K-12 schools won’t take a hit

The federal government typically supplies less than 10 percent of the nation’s annual spending on K-12 schools. Districts collectively get the vast majority of their budgets from state and local funding sources, though the proportions vary widely from district to district.

Schools receive most of their federal aid under an arrangement known as “forward funding,” which means schools receive their funds for the upcoming school year on July 1, even though the federal government’s fiscal year doesn’t start until Oct. 1. The July 1 date has already passed, so this school year’s funding for Title I, the Individuals with Disabilities Education Act, and other smaller programs is already in place.

One major exception: Impact Aid could take an immediate hit. Roughly 1 in 10 of the nation’s school districts, serving roughly 10 million students, receive Impact Aid grants from the federal government. That’s because their districts include land that’s owned by the federal government, which doesn’t pay property taxes.

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A man standing on the edge of a one dollar bill that is folded downward to look like a funding cliff.

Districts can’t raise local revenue off that land, so the federal Impact Aid program helps make up the difference partially or entirely. Those districts serve a wide variety of vulnerable populations: students whose military parents frequently move from place to place, students who live in low-rent public housing operated by the federal government, and students from Native American tribes.

Many of these districts are among the roughly 2,900 out of the nation’s 13,000 districts that rely on the federal government for more than 10 percent of their annual operating budgets, Education Week reported earlier this year.

Payments for schools that serve those students roll out on a different cycle than other pools of education funds. Some school districts could lose funds they’re expecting to receive on Oct. 1 to help pay for basic line items like operating expenses and teacher salaries, said Nicole Russell, executive director of the National Association of Federally Impacted Schools.

Another program likely to feel immediate effects is Head Start, which provides early learning services for children up to age 5 and receives federal grants on a monthly basis. Some federal government websites could shut down, temporarily blocking the public’s access to federal research and U.S. Department of Education resources like databases of evidence-based practices.

A longer-term shutdown could cause more substantial problems

October is the month when many school districts report enrollment counts to the federal government—data that the federal government relies on for a number of purposes, including to determine federal aid.

But that process for districts receiving Impact Aid is more complex than for the average school district.

Many districts, those that receive Impact Aid and those that don’t, have recently seen considerable turnover among administrative staff who handle federal grants.

Employees who are newer to the process might turn to the U.S. Department of Education for technical assistance, but no one’s likely to pick up the phone during a shutdown. If the government ceases operations, 90 percent of the department’s employees would likely be furloughed immediately, as has happened during past shutdowns.

“If they get information wrong, if they don’t perform the count to the department’s standards and the department can’t use the data they come up with, because they don’t do it correctly, that could cost districts incredible amounts of money,” Russell said.

Shutdown or no shutdown, turmoil in federal funding has been causing problems for years

The prospect of a government shutdown is so common that federal agencies can often redistribute guidance documents from previous shutdowns to help illustrate how a new one will play out.

In 2021, the U.S. Department of Education’s shutdown memo highlighted the possibility that some federal grant programs for schools would be delayed or disrupted if a shutdown prevented workers from carrying them out.

Even if that doesn’t happen this time, broader turmoil with federal appropriations in the last decade has taken a toll on schools, Russell said. When lawmakers can’t agree on how to keep the government funding, ripple effects eventually include added costs for districts.

Some districts have had to request early payments from the federal government or even take out loans when the annual schedule for federal appropriations shifts because of heated budget negotiations in Congress, she said.


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