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How Does Federal Education Funding Work?

Here’s a slimmed-down rundown of how the federal funding process for education works.

Each federal fiscal year runs from October 1 to September 30 of the following calendar year. This schedule, in theory, dictates the basic federal funding schedule. 

Typically, early in the calendar year, the president submits a spending request to Congress for the upcoming fiscal year. These requests make a lot of headlines because they show presidential priorities. For example, in 2018 President Trump proposed to cut about 14 percent of the Education Department’s budget for fiscal 2019, which in historical terms would be a major reduction. 

But Congress never just adopts these requests because federal lawmakers like their power over spending no matter who’s president. And the president can’t just enact his proposal. The House and Senate separately develop and approve versions of an appropriations bill that includes U.S. Department of Education funding. Then, the two chambers must reconcile their versions, which then go to the president for signature.

Typically, education spending, unlike federal aid for health care or defense, is not at the center of big federal funding fights. But there are ways this process can get and has gotten stuck in the mud. 

To use one common example: If Congress can’t reach a fiscal spending deal by the September 30 deadline, it often passes short-term extensions of current funding levels to kick the can down the road and keep the government open while lawmakers negotiate. Short-term government closures have a minimal effect on day-to-day school operations.

For technical reasons, those delays often don’t end up significantly restricting or cutting off money K-12 schools rely on in real time. But they create uncertainty for state and local officials.

Federal K-12 aid generally falls into two categories: formula grants and competitive grants. Formula grants are programs in which money is distributed based on formulas set down by law, and the Education Department can’t change those. Congress can designate some competitive grant programs, however, and the department picks the winners of those grants. 

One more thing: Since the early 2010s, levels of funding for education and other areas have been dictated in part by spending limits that kick in automatically, absent action by lawmakers, as a way to limit federal spending. However, Congress has agreed to deals that raise these caps every so often. These negotiations also affect how much Washington spends on schools.

The Education Department’s budget and spending web page includes the president’s request and more detailed information about individual programs.