We’re now well into the first full school year since the last bit of federal pandemic relief funding dried up. As we’ve pointed out in the past, some districts are feeling the loss of those dollars more acutely than others, but most are still budgeting cautiously.

Without a doubt, districts’ fiscal confidence has been rattled by the “stops-and-starts” of federal funding and other compliance uncertainties. But despite what headlines suggest, the major federal line items remain largely unchanged. So what’s driving the K-12 financial challenges that so many of us are hearing about? As it turns out, it has little to do with what’s happening in Washington. 

In most places, state and local budgets are now set through June 2026, barring any mid-year changes in state revenue. Even Pennsylvania, which is famously slow to pass a spending plan, got one on the books this week. And because K-12 schools are forward funded, funding levels for the current school year were locked in long before the government shutdown.

However, state revenues are beginning to flatten after years of growth. Fixed costs like wages, transportation, and insurance are rising, and district leaders are prioritizing those line items over spending on new programs or vendors.

Enrollment is also falling. Oregon (-10.2%), West Virginia (-7.9%), and Mississippi (-7.4%) have seen the steepest declines between 2019 and 2023. Demographic shifts are accelerating enrollment declines, too: the National Center for Health Statistics found that the birth rate has dropped from 2.1 children per woman in 2007 to just under 1.6 in 2024—the lowest in U.S. history.

Although the dollars are still relatively small, states are also reallocating funds toward priorities that sit outside traditional Local Education Agencies, like charter schools and voucher programs. 18 states now operate 20 Education Savings Account (ESA) programs, which allow parents to redirect public per-pupil funds to school choice options—and school boards are weighing how they impact budgets. Ultimately, these decisions are not shrinking the pie, but they are impacting who gets a slice.

As a result, districts that previously relied on stable, if not growing, headcounts are now confronting a new reality: smaller class sizes, lower funding, and compulsory fiscal conservatism. Consider a Minnesota example. The state has a “Blue Ribbon Commission” to find (somehow) $250 million in special education savings—a category with the most fiscal protection, typically. But we are not in typical times. 

The next few months will bring more clarity. In mid-December, states will begin forecasting revenues for 2026, and governors’ budgets will follow early in the new year; because the federal government only supplies about 10% of district funding, these numbers are critical. And with 36 gubernatorial races on deck in 2026 (more than half without incumbents running), we can anticipate some more significant shifts in state education funding priorities.

We’re also watching:

On November 10, ED announced seven new priorities for the Fund for the Improvement of Postsecondary Education (FIPSE) for FY 2025. 

FIPSE is a unit within ED’s Office of Postsecondary Education that conducts competitive grant competitions each year that aim to "improve postsecondary educational opportunities." Public and private nonprofit colleges are eligible to receive the grants, as are technical schools, professional associations, employers and unions, state and local education agencies, and other entities.

ED issued a Federal Register notice inviting applications for FIPSE grants that would address the following priorities:

FIPSE has historically been utilized as one of the only discretionary postsecondary grant programs to advance an administration’s priorities. For example, former President Obama utilized the fund for the First In the World initiative that sought to improve active learning, student success, and affordability. Similarly, ED is now utilizing FIPSE to advance its initiatives including Workforce Pell and accreditation reform.

With applications officially having opened on November 12, interested entities must now submit applications by December 3. ED plans to award grant money through FIPSE by December 31.

On Wednesday, the Trump administration issued a notice in the Federal Register to expand data reporting requirements for the Integrated Postsecondary Data System (IPEDS) beginning this school year. The new requirements, collectively called the “Admissions and Consumer Transparency Supplement” (ACTS), are intended to uncover “whether institutions of higher education are using race-based preferencing in their admissions processes.”

The ACTS was developed in response to President Trump’s August 7 memorandum and set in motion by Education Secretary McMahon the same day. The proposed requirements underwent a public comment period, drawing more than 3,000 responses before it closed October 14.

Initially, ACTS requirements were expected to focus on four-year schools with selective admissions processes, which ED argue “have an elevated risk of noncompliance with the civil rights laws.” Following public comment, ED determined that all four-year institutions that receive federal funding would be subject to the new reporting requirements. Two-year colleges and open-enrollment institutions that only award aid based on financial need would be exempt.

Yesterday, the U.S. Department of Education formally submitted the request to the Office of Management and Budget to make these changes to IPEDS. It is unclear what OMB’s timeline will be for reviewing and/or approving the request. 

A coalition of higher ed organizations and advocacy groups led by the American Council on Education (ACE) panned the ACTS, citing concerns about the timeline and the manpower necessary to be in compliance.

Check out W/A Jobs, which features 3,396 career opportunities from 312 organizations across the education industry. A few roles that caught our eye over the past week:

Opportunity for state leaders: The National Governors Association (NGA) is accepting applications for its Center for Best Practices’ Policy Academy. The Policy Academy will run from January 2026 through June 2027; participants will work to develop state data dashboards that measure student and system success across academics, workforce and postsecondary readiness, civic preparation, and student experience and wellbeing. Applications are due December 4.