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NCSL Updates
Hill Update: NCSL State-Fed Advocate on Budget
NCSL’s State-Federal team have been on Capitol Hill as policy discourse intensifies around executive actions, budget resolution measures and federal tax cuts. NCSL continues to advocate on federal funding and revenue reforms and their impacts on states, which were highlighted in an NCSL letter last fall in anticipation of quick fiscal action in the new Congress. Staff discussions range across the policy spectrum but focus on the following considerations:
- States rely on federal-state partnerships to implement successful services.
- By the end of June, many states will have enacted their fiscal year 2026 budgets based on forecasts dependent on historic and promised federal commitments. Any substantial changes adversely affect these budgets and states’ ability to govern.
- Federal and state tax policies often function as amplifiers. To boost the impact of federal policies, states often enact complementary versions, such as linking federal and state policy on child and dependent care and earned income tax credits.
- The tax-exempt status of state and local bonds offers flexibilities and cost savings allowing states to invest in roads, schools, water and other infrastructure.
Congressional members have been clear that all things are on the negotiating table; what remains unclear is what committee reconciliation actions will look like or when they will be unveiled. The timeline is dependent on when the House and Senate can finalize a budget resolution.
The Executive Action Edge
Stay up to date on the evolving presidential action landscape with NCSL’s new executive action tracker.
Congressional Updates
Senate Introduces Revised Budget Resolution
The Senate passed 51-48 a revised budget in the early hours of Saturday morning in response to the House budget resolution, which passed on Feb. 25. The latest Senate version provides minimum spending floors to its committees in billions of dollars while preserving the House’s preferred reductions in the trillions for the lower chamber’s committees. In an accounting maneuver, the legislation also seeks to institute policy baseline definitions instead of those in current law to lower the impact of tax cuts on the national deficit from over $4.6 trillion to $1.5 trillion. The exercise is an effort to portray the extension of the Tax Cuts and Jobs Act of 2017, which is a major part of the budget resolution, as being less costly since it’s based on existing tax law.
Congressional leaders are pressing for both chambers to agree on text for the final passage of a budget resolution before the start of the two-week-plus recess beginning April 11.
Administration Updates
Department of Education Cancels Spending Extension for Federal Education Stimulus Funds
The department announced on March 28 the cancellation of spending extensions for the remaining Education Stabilization Fund grants for states. The announcement, which is effective immediately, implicates the following funding streams: Elementary and Secondary School Emergency Relief, Homeless Children and Youth, and Emergency Assistance to Non-Public Schools.
The spending deadline for ESSER funds was Jan. 31, but over 40 states had received extensions for “late liquidation” from the department to spend about $3.6 billion in remaining funds through March 2026. The department said it will consider new extensions on a project-specific basis. States and school districts will have to shoulder the cost of previously approved federal program expenses if they are denied by the department.
This change comes after the department announced in February that states that received spending extensions would need to submit receipts directly to the department for reimbursement. This was a sudden departure from the longstanding process where states would reimburse schools for preapproved expenses through federal funds held by the state treasury. The action temporarily disrupted reimbursements for some states.
In a related action, the department’s reduction in force in March eliminated the Office of State and Grantee Relations, which oversaw the disbursement of ESSER funding to states. In the weeks since the office’s elimination, several states reported delays in receiving reimbursements.
NCSL has been supportive of spending extensions for education relief funds and is monitoring the impacts on states.
Court Halts Billions in Public Health Funding Cuts to States
According to a lawsuit filed by 23 states and the District of Columbia, the Department of Health and Human Services began sending notices to states on March 24 rescinding over $11 billion in public health funding. The terminations impact Centers for Disease Control and Prevention grants used for infectious disease tracking, vaccine access and public health infrastructure—as well as block grants from the Substance Abuse and Mental Health Services Administration that pay for mental health and substance use services. On April 3, a judge in Rhode Island issued a temporary restraining order preventing the department from moving forward with the cuts.
As detailed in the court filing and many media reports, HHS noted that the funds had been earmarked for COVID-19 pandemic activities and were no longer needed because the pandemic has ended. But the funding did not come with such strings, according to the suit; rather, HHS expressly approved of the ongoing use of the funds for a variety of state public health activities. The impact on many states has been severe, with many others still assessing the effect of the cancellations at the time the temporary restraining order was granted. NCSL encourages members to reach out to their public health agencies for specific information on the impact in their states.
NCSL will share information about state impacts and responses as it becomes available. The following is preliminary information about the effect of funding cuts in several states highlighted in the court filing:
- California: $800 million in CDC grants, $119 million in Substance Abuse and Mental Health Services Administration grants affecting 100 community-based organizations.
- Colorado: $220 million in CDC funding affecting 190 public health employees, $29 million in SAMHSA grants.
- Massachusetts: $84 million in CDC funding, SAMHSA recission jeopardizes funding for 27 providers of community mental health services to adults and children with serious mental illness.
- Minnesota: $220 million affecting 200 public health employees.
- Nevada: 48 public health employees terminated, plus contractors working under the cancelled grants.
- Pennsylvania: $500 million affecting 150 public heath employees.
- Rhode Island: $13 million.
- Washington: $118 million affecting full-time public health employees.
Education Department Releases ‘Dear Colleague’ Letter on Student Privacy Laws
The letter identifies the department’s “priority concerns” related to parental access to education records under the Family Educational Rights and Privacy Act and the Protection of Pupil Rights Amendment. These concerns include school policies or practices that may restrict a parent’s ability to review educational records of their student and information related to a student’s gender identity. The department requests that each state educational agency submit documentation by April 30 showing that the state and local educational agencies are in compliance with FERPA and PPRA regarding the priority concerns identified. Read more
Education Department Requires States to Comply With Its Interpretation of Civil Rights Law or Risk Losing Title I Funding
The department sent a letter to state education chiefs that threatens the loss of state Title I-A funds if they do not certify within 10 days that their state and schools are in compliance with the department’s interpretation of Title VI and the U.S. Supreme Court’s 2023 decision in Students for Fair Admissions v. Harvard, which ended affirmative action in college admissions. The department interprets federal civil rights law in a manner that would require educational institutions to cease using race as factor or consideration in all educational activities and decision-making, including for “admissions, hiring, promotion, compensation, financial aid, scholarships, prizes, administrative support, discipline, housing, graduation ceremonies, and all other aspects of student, academic, and campus life.” This interpretation was outlined in a letter issued on Feb. 14 and further clarified in a frequently asked questions document. The letter explains that using nonracial information as a proxy for race also violates federal civil rights law. Read more
Army Corps of Engineers and the EPA Call for Comments to Help Revise WOTUS Definition
The agencies aim to collect input to target specific topic areas related to revising the “waters of the United States” definition in accordance with the U.S. Supreme Court’s 2023 ruling narrowing the definition in the case of Sackett v. Environmental Protection Agency. As a part of this process, the WOTUS notice was published in the Federal Register. All comments submitted via the portal are due by April 23. The EPA will also host a virtual listening session for states on April 29 from 9:30 a.m.-Noon ET. Register for this event and other listening sessions on the EPA website.
National Financial Literacy Month Aims to Tackle Fraud
April is Financial Literacy Month, which presents an opportunity for legislators to help raise awareness about financial scams targeting all Americans but especially vulnerable communities, such as Chinese Americans. Recent reports from the Federal Communications Commission highlight a surge in scam robocalls targeting Chinese speakers. These fraudulent calls often impersonate Chinese law enforcement, federal employees or local health officials, misleading victims into exposing personal information or making large financial transfers.
The FCC advises consumers who get an inquiry from someone who says they represent a health care company, a government agency or law enforcement to hang up and call the phone number on their account statement, in the phone book or on the company’s or government agency’s website to verify the authenticity of the request. By educating the public on these tactics, Financial Literacy Month can serve as an opportunity to empower people with the knowledge and resources needed to identify and avoid such scams. Read more
Court Updates
Supreme Court Backs FDA Block of Flavored E-Cigarettes
The Supreme Court unanimously reversed a 5th Circuit Court of Appeals decision in FDA v. Wages and White Lion Investments, LLC, a case involving two companies whose applications to sell e-cigarettes that taste like sweet treats were rejected by the Food and Drug Administration. The court held that the FDA did not act arbitrarily and capriciously when it denied the companies’ applications to market the flavored e-cigarettes, and that “the FDA’s denial orders were sufficiently consistent with its predecisional guidance—as to scientific evidence, comparative efficacy, and device type—and thus did not run afoul of the change-in-position doctrine.” Read NCSL’s case summary.