January 28, 2025
Yesterday, the White House budget office announced a federal funding freeze, sparking concerns across the education community. While there is still much to clarify, here’s the latest information we have and how AESA is responding.
UPDATED (12:00 pm EST, January 29)
Latest: A federal judge has temporarily blocked the funding freeze. The administrative stay will be in place until February 3. Another court hearing is scheduled that morning to consider the issue.
UPDATED SECTION (5:40 pm EST, January 28)
FIRST: Federal fiscal year 2025 is what we are living in today, January 28, 2025. It started October 1, 2024 and runs through September 30, 2025. Federal FY25 dollars will be in schools for the 2025-26 school year. Schools today, are spending federal FY24 dollars (generally speaking) in their schools.
Our initial blog post indicated that federal formula funds (like IDEA and Title I) are forward-funded and would not be impacted. That remains true. We want to clarify that while states are fully allocated their forward funded programs on July 1 and October 1, the actual drawing down for these funds is continual throughout the year. That said, the FY24 funds currently in play for schools for the 24-25 school year will not be impacted.
Our initial blog post indicated that impacted programs COULD include Impact Aid and Head Start. We have been able to confirm that those programs will not be part of the full roll out of the final impoundment. A Q&A from the Office of Management and Budget (OMB) explicitly stated that Head Start is exempted from the freeze.
Regarding Impact Aid we have confirmed that the next payment for Impact Aid will be when FY25 funding is completed, currently the date is March 14th unless there’s a shutdown or another delay. That means that there is no money currently at play that districts cannot access or are due from the Department of Education regarding Impact Aid. If the freeze continues through March 14th then Impact Aid could be caught in a potential freeze. Read statement from NAFIS here.
Continuation of Original Post below.
What We Know So Far
- Formula Funding: At this time, our understanding is that formula funding for FY24 (e.g., Title I) has already been distributed to districts on either July 1 or October 1 and cannot be withheld.
- Programs Potentially Impacted: Funds that are disbursed closer to “real-time” — such as Impact Aid, Head Start, and school meals — may be paused, but this has not yet been confirmed.
- Competitive Grants: Any new grant competitions (e.g., through ED, USDA, DOJ, Energy) are currently paused due to the freeze. However, most FY24 competitive grant funds have already been awarded and are not expected to be problematic.
It’s important to note that this freeze is part of a broader set of proposals with limited details. The situation is likely to face Congressional and legal challenges, and AESA will provide updates as more information becomes available.
Looking Ahead
For FY25, the release of funds for forward-funded programs like Title I is not expected until July 2025. Historically, these funds have been disbursed on time after Congress passes the Continuing Resolution (CR) for the fiscal year. Nevertheless, AESA will monitor any developments that could affect these timelines and advocate for timely releases.
How AESA Is Responding
- We will keep you informed: As more details become available, our team will continue to provide timely updates and insights to keep you informed. Be sure to follow our Federal Update blog.
- A trusted source of stability: In moments like this, AESA remains committed to being your reliable partner and source of accurate information.
Thank you for your continued trust in AESA. Together, we will continue working toward solutions that ensure students, educators, and communities have the resources they need to succeed.