The NCGA is on vacation, and state budget talks are still stalled. This week has been busy at the federal level, however, with an updated reconciliation bill passing Congress, and unprecedented withholding of education funds by President Trump.
Federal Reconciliation Process
Much is at stake for North Carolina students and schools as the federal reconciliation process continues in Washington, D.C. In May, on the heels of President Trump’s proposed skinny budget, the US House passed their reconciliation bill. Earlier this week, the GOP majority in the Senate narrowly passed their updated version of this bill, before sending it back to the House. House republicans passed the Senate’s version of the bill on Thursday, with all democrats and only two republicans voting no. President Trump is expected to sign it on July 4th.
This bill includes many provisions that will harm students and schools, including stricter federal loan limits that rescind a provision allowing borrowers to pause payments during financial uncertainty. It also includes private-school scholarship tax credits, though the latest version now would allow states to opt in or out. While structured differently from North Carolina’s taxpayer-funded private school voucher program (the Opportunity Scholarship Program), the intent of this proposal is the essentially the same: to provide government funding to families sending their children to private and religious schools. These federal vouchers would be funded by donations, in the form of money or stock, with taxpayers receiving 100% of their contribution back in the form of a tax bill discount. The Senate’s version of the bill would provide credits of up to $1700 per individual donor, and removes the cap (previously set at $5 billion) on total spending for federal vouchers. The removal of this cap could result in exponentially more taxpayer dollars going to private schools.
The bill also includes cuts to Medicaid and SNAP benefit cuts, which will directly impact children from low-income families. The latest version will reduce the Medicaid budget by requiring able-bodied, childless (or even those with older children) adults to work a minimum of 80 hours a month. Nearly 12 million people will likely lose insurance due to this restriction.
Withholding of Federal Funds
In other news this week, the U.S. The Department of Education withheld $6.8B in grants already allocated by Congress, which were scheduled to be released on July 1st. The Department justified the move in order to review the funds “given the change in Administrations.” The impounded funds include migrant education ($375M), professional development for educators ($2.2B), English learner services ($890M), academic enrichment ($1.3B), and before- and after-school programs ($1.4B). Title 1 and IDEA have not been affected by this hold.
Based on 2024 grants, this means an estimated 13.6% , or $165.5M, of North Carolina’s education funds are currently in limbo: $5.3M in migrant education, $67.9M on professional development for educators, $19.3M in English learner services, $35.7M in academic enrichment and $37.2M in out-of-school programs. This will add to additional financial strain for districts across the state, especially as the NCGA has recessed with no budget for the upcoming school year.
What this means for Schools and Students
Actions taken this week by both President Trump and the US Congress have added more concern and uncertainty for our schools and students, especially those who are most marginalized. As public school districts are faced with likely budget shortfalls and the future of funding streams for federal education programs that serve our most vulnerable students remain murky, GOP lawmakers have instead prioritized tax credits and cuts for private schools and the wealthy. Negative reactions to the withholding of promised federal education funds has been significant, and lawsuits are anticipated.
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