ADVOCACY & POLICY UPDATE - August 24, 2026

OMB Final Guidance Fight Awaits Congress in September

Appropriations

Before departing for August recess, both chambers advanced competing continuing resolutions (CRs) to avoid a government shutdown when the fiscal year ends on September 30. The House passed a shorter CR that extends funding through December 4, while the Senate passed a bipartisan CR that goes through December 11. The Senate version also includes provisions to block the controversial Office of Management and Budget (OMB) grantmaking rule and freezes additional funding for border patrol agencies. The House is scheduled to return on August 31 and the Senate on September 8. Lawmakers will have a tight window — just 16 legislative days for the House and 14 for the Senate — to reconcile the difference between the two CRs, resolve the OMB grant policy dispute, and pass a unified bill to avert an October 1 partial government shutdown.

The dispute over the OMB grantmaking rule is part of a broader fight between the Trump Administration and Congress over control of federal spending. GOP lawmakers have continued to push back against efforts by the Administration to influence federal grantmaking, delay the release of congressionally approved funds, and use rescission authority to cancel appropriations. Lawmakers are also watching to see whether OMB Director Russell Vought will attempt to use a “pocket rescission” to cancel appropriated funds before the September 30 end of the fiscal year — a tactic used by the Administration last year to cancel $4.9 billion in foreign assistance. The White House has not ruled out using additional “fiscal tools” before the end of the fiscal year, raising concerns among appropriators about the administration’s willingness to withhold funds that Congress has approved.

The Administration’s broader approach to federal grantmaking has also faced repeated challenges in federal court. Judges have blocked efforts to cancel grants based on new requirements or conditions imposed after funds were appropriated, while the Administration has acknowledged canceling billions of dollars based on the political identity of grant recipients’ states. The Supreme Court has not yet definitively resolved the broader questions surrounding President Trump’s authority to withhold or rescind congressionally appropriated funds.

Republican appropriators have taken some steps to reinforce congressional control over spending, including adding stricter provisions to appropriations bills governing how funds can be shifted between accounts and providing more explicit spending instructions. The ongoing disputes could add another layer of uncertainty as Congress works to finalize FY2027 appropriations and avoid a shutdown.

Lifelong Learning Act

On Friday, August 14, Congressmen Don Davis (NC) and Brad Finstad introduced the Lifelong Learning Act (HR 10085), which would update the Workforce Innovation and Opportunity Act (WIOA) to provide additional resources for workforce training programs aimed at addressing talent shortages by upskilling employees and reconnecting individuals to the job market. 

The legislation would increase the amount of Adult and Dislocated Worker funds that local workforce development boards can use for Incumbent Worker Training from 20 percent  to 30 percent and increase the cap on transitional job training from 10 to 15 percent. It would also allow local workforce boards to serve as one-stop operators in their local workforce areas, eliminating the current requirement to select a one-stop operator through a competitive process.

Senators Gary Peters (MI), Ted  Budd (NC), and John Hickenlooper (CO) introduced the bipartisan Senate companion legislation in February.

Click here to access a press release and learn more about the bill.

U.S. Department of Education Proposed Rule

On Wednesday, August 19, the U.S. Department of Education (ED) released proposed rules to reform the federal accreditation system, which colleges must participate in to remain eligible for federal student aid. The proposed regulation would seek to increase competition among accreditors, place greater emphasis on student outcomes, and encourage “intellectual diversity.”

The proposal is part of the Administration’s broader effort to reform the higher education system and would give accreditors new requirements related to student success and credit transfers. Under the proposal, colleges would need clear policies for transferring credits; when transfer credit is denied, institutions would be required to provide students with a written explanation and allow 15 days to appeal.

ED said the changes are intended to shift accreditation toward student outcomes, affordability, accountability, and workforce alignment, rather than what officials characterize as bureaucratic processes. Critics, however, have raised concerns that the changes could politicize the accreditation process. 

The proposed rule is now open for public comment following negotiations through ED’s negotiated rulemaking process. Twelve members of the negotiated rulemaking committee voted in favor of the proposal, while two members abstained.

Public comments are due by Monday, September 21. The Department of Education expects the changes to take effect July 1, 2027.

Click here to access the full press release.

K-12 Formula Funds

The U.S. Department of Education (ED) plans to distribute billions of dollars in FY26 K-12 formula funds to states this fall using its own grant management system, despite its agreement with the U.S. Department of Labor (DOL) to oversee elementary and secondary education programs. ED will use its existing G5 grant management platform to award Title I-A grants, which support high-poverty schools; and Title II-A grants, which support teacher professional development. The funds are expected to be awarded October 1, the typical date advanced funds are made available to states. Congress appropriated $10.8 billion in Title I advanced funds and $1.68 billion for Title II for FY26.

The continued use of ED’s system comes as the Trump Administration shifts responsibility for certain education programs to other federal agencies as part of its effort to downsize the agency. ED and DOL have said their partnership has produced strong results, including record application numbers for nearly all jointly administered FY26 grant competitions. DOL’s grant management system will continue to be used for career and technical education formula funds. 

According to ED, more than 6,700 payments totaling over $1.82 billion have been processed through DOL’s system for programs administered by the Office of Career, Technical and Adult Education. Special education funding is following a similar transition with FY26 formula funds under the Individuals with Disabilities Education Act being distributed through ED’s system, while subsequent grants are expected to move to the Department of Health and Human Services’ grant management system under a separate interagency agreement.

The Federal Education Association representing ED employees criticized the use of multiple grant management platforms, arguing that the approach creates additional administrative burdens and inefficiencies for both federal staff and states.

OMB Uniform Guidance

The Trump Administration’s proposed overhaul of federal grant guidance is facing significant opposition from education, state and local government, nonprofit, law enforcement, and higher education groups concerned about the potential impact on the stability and predictability of federal funding.

The proposal would give political appointees greater authority to terminate federal grants if they determine that recipients are not aligned with administration priorities. It would also make the guidance binding regulation, limit funding for certain diversity, equity and inclusion (DEI) initiatives and other policies, and reduce the role of peer review in some grant-making decisions. It has drawn nearly 500,000 public comments, largely in opposition. Critics warn that allowing grants to be terminated mid-award could create significant financial uncertainty for communities and organizations that rely on federal funding for education, workforce development, housing, health care, public safety, and other services.

State and local government groups have raised concerns about the ability to plan and maintain services if federal grants can be terminated during an award period, while higher education and K-12 organizations have cited potential disruptions to education, research, workforce training, and other federally funded programs. Supporters of the proposal argue that federal funding should not support activities they consider inconsistent with federal law or administration priorities, and that greater oversight is necessary to ensure taxpayer dollars are used appropriately.

Before adjourning for the August recess, the Senate passed a stopgap funding bill that would fund the government through December 11 and prohibit the administration from finalizing the proposed grant rule until that date. The provision still faces uncertainty in the House when lawmakers return in September. The delay would give Congress and affected organizations additional time to weigh the proposed changes and their potential impact. The issue is expected to remain a point of contention when Congress returns in September.

H-1B Visas

On Monday, August 24, the Trump Administration proposed a $103,265 fee for new H-1B visa petitions, reviving a policy that was blocked by a federal judge earlier this year. The Department of Homeland Security (DHS) submitted the proposal to the Federal Register, to be officially published tomorrow, when a 30-day public-comment period will begin. The Administration says the fee would help curb the misuse of the program and generate revenue for federal immigration activities. DHS acknowledged that the fee could reduce the number of H-1B registrations and lead some employers, particularly small businesses, to file fewer petitions. 

The proposal follows lawsuits from labor unions, research universities and states, which argue the fee would make it more difficult for employers to recruit global talent and could particularly have a negative impact on hospitals and the technology sector. In June, a federal judge blocked the Administration’s previous $100,000 fee, ruling that it amounted to an unlawful tax requiring congressional approval. H-1B approvals are capped at 85,000 annually, including 20,000 for workers with advanced degrees.

Click here to access the notice.