What’s Happening with Federal Education Policy and What California Must Do in Response

If anything is certain about the federal education budget and policy, it’s that California’s school systems are facing an unprecedented level of uncertainty. Because of this, our policymakers need to be proactive to respond to the federal changes and protect the civil and programmatic rights of our students. 

On the budget front, there is a fight brewing. The Senate is signaling that it is interested in maintaining a status quo approach. The President instead wants to make significant cuts and continue in the direction of shuttering the U.S. Department of Education (DOE), which appears to have the Supreme Court’s blessing (at least for now) to dramatically reduce staffing. The House then appears to be somewhere in between the Senate and the President, willing to make some cuts but not all proposed.  

While details continue to emerge, Children Now is pushing California lawmakers to act now to protect California students from the impacts of these federal budget and policy changes. Although federal funding is a small part of total education funding in California (5.9% of TK-12 funding in 2024-25), the uncertainty around potential cuts will make it difficult for school districts to budget effectively. This uncertainty applies not only to programs like Title III, migrant education, adult education, and after school and summer school, but there is also the indirect impact of cuts to Medicaid and Supplemental Nutrition Assistance Program (SNAP). We are deeply concerned about the effect of DOE staffing cuts, particularly how they will negatively impact student rights and financial aid for higher education. 

Below we break down the many present and potential threats to kids’ education in California and what state policymakers can do to protect our students. 

1. Budget Reconciliation Bill (Passed and then Signed July 4, 2025)

While the Budget Reconciliation bill didn’t reduce education programs directly, it did make $930 million in cuts to Medicaid (health care for low-income families) over the next decade, plus reductions to SNAP and other programs supporting low-income families. School districts can receive Medicaid reimbursement for some school-based health services, so these Medicaid cuts will result in less reimbursement for school districts and may force some to reduce their school-based health, mental health and oral health services. In addition, the Budget Reconciliation bill provides the Office of Budget and Management (OMB) the authority to identify “budget and accounting efficiencies,” and it is possible that this authority could be used to go after education programs in either the current fiscal year (2025) or the budget year (2026). 

Potential Additional State Implications of Medicaid and SNAP Cuts: The main state funding source for school districts is the Local Control Funding Formula (LCFF), which provides almost 80% of state funding to districts. One of the main drivers for LCFF is the number and percentage of students who are low income, English learners or foster youth. Many of the students who are identified as “low income” are automatically identified as such using federal data on participation in Medicaid and SNAP. As the Budget Reconciliation reduces program eligibility, it will reduce the number of students who automatically qualify as “low income” for LCFF purposes, and lead to less LCFF funding for districts in the future. This automatic LCFF qualification is particularly important after the state adopted a universal free meal program, and families have been less willing to fill out the paperwork to be eligible for the federal school meals. Unless improvements in data collection are made, districts will have fewer students identified as low income, and thus their LCFF funding will be reduced in future budgets. 

What California Policymakers Must Do: Mitigate the cascading effects from cuts to Medicaid and other family supports. State budget proposals in the next budget must mitigate the impacts of proposed federal reductions to health, food and other supports for families with kids. In addition, the state should begin to explore alternative methods of automatically identifying students as eligible for LCFF and the federal meal program. 

2. Federal Education Budget for 2026 Fiscal Year (Starting Oct 1, 2025)

The President has submitted his budget proposal for next year and it is being considered by Congress, with an October 1 deadline to adopt a budget (or adopt a continuing resolution to extend the 2025 budgeting levels). The President proposes to reduce the federal Education budget by $12 billion. According to the DOE, California’s share of these reductions would be just over $1 billion, with an additional $1.7 billion in higher education Pell grants and work study. 

The proposal relies on two major approaches to reduce funding. First, it eliminates $4.4 billion in programs (including Title III for English learners, adult education, migrant education, numerous middle and high school college readiness programs, and research and data programs). Second, it combines 18 programs with $6.5 billion in current funding and instead provides a $2 billion block grant, amounting to a $4.5 billion reduction. This consolidation and cut proposal would impact funding for teacher professional development and recruitment, after school / summer school programs, school safety, technology, literacy, rural education, and programs for homeless youth.  

While the House has yet to weigh in, the Senate has moved its proposal out of committee with proposed spending at roughly the current year level. This budget battle will be part of a larger budget dynamic around the level of federal spending reductions that will happen. 

What California Policymakers Must Do: Prioritize equity. Because most of the programs the President has proposed for reductions are highly equity-focused, state policymakers should be prepared to have a strong equity focus when they approach 2026-27 budget decisions. After a federal budget is adopted, if cuts are made to federal education budgets, state policymakers should determine whether those cuts should be backfilled with state Proposition 98 funding, or whether additional equity-focused funding should be provided to offset the impact of reduced federal funding. The state already owes schools at least $1.9 billion in Proposition 98 funding because it underfunded the minimum guarantee for schools in the 2024-25 fiscal year, and that amount is likely to increase based on recent state revenue reports. 

3. Massive Reduction to the U.S. Department of Education Staffing

On July 14th, the Supreme Court issued a temporary ruling that effectively allows the DOE to lay off nearly half of the Department’s staff. In addition to its role in allocating and overseeing federal programs, the DOE plays a critical role in ensuring the rights of students with disabilities and English learners, as well as civil rights based on race and gender. This role will be severely limited or outright eliminated with the proposed staffing reduction. The staff reductions have already eliminated the office that administers bilingual education programs, all staff in the Office of the General Counsel that specialize in K-12 funding and special education, and seven of the regional divisions of the Office of Civil Rights, including the San Francisco Office. These reductions have left current investigations in limbo and will lead to less enforcement of civil rights and programmatic protections for California students. Students in higher education are also impacted by the staffing layoffs due to concerns about whether the Department will be able to process all student loans with such limited staff.  While the ruling is technically temporary as a related court case continues, it allows the mass layoffs to move forward until the original case is resolved. In addition, the DOE leadership seem to be ignoring a lower court order concerning the Office of Civil Rights. 

What California Policymakers Must Do: Defend civil rights. While the current federal process for protecting students’ civil and programmatic rights has much room for improvement, not providing protections shouldn’t be an option in California. State policymakers should consider developing a state civil rights and program rights oversight process that replaces and improves the role currently provided by the federal government. Steps to take in this direction include: 

• Conducting a comprehensive review of the current federal process as well as the role that the current state’s uniform complaint process could play in filling the gap the federal government is creating. 
• Consider adding civil and programmatic rights protections into state law that would allow the state to play the enforcement role currently played by the federal government. 
• Consider adding staffing capacity at the Attorney General’s Office or the California Department of Education to backfill the role currently played by the Office of Civil Rights.

4. Current Year Funds for Fiscal Year 2025 Administrative Review by OMB and Potential New “Assurances” 

The day before the release of large education grants were supposed to go out to states to support schools in the 2025-26 school year, the OMB notified states that they would be holding $6.8 billion in education grants, including an estimated $939 million for California schools. This action surprised our schools and left them with uncertainty about their budgets for the school year about to start. Under pressure from Senators and legal challenges from the states (California’s Attorney General, Rob Bonta, announced a lawsuit brought by almost two dozen states), the Administration reversed course and eventually released these funds. However, the Administration notified the field that the released funds will be subject to a new set of “guardrails” that would include adhering to the Presidential interpretation of federal law as laid out in executive orders. It is reasonable to expect that any application of these new guardrails will be decided in future court cases. 

What California Policymakers Must Do: Continue legal challenges. Adding requirements for additional assurances on top of current law requirements for individual programs is inconsistent with the current education laws governing these programs. To the extent that the federal administration attempts to impose additional assurances concerning issues around equity and inclusion, immigration, or rights of specific students based on race or gender identification, the state should challenge such requirements in court.