Potential U.S. Government Shutdown

Dear District Administrators,

The purpose of this memorandum is to discuss the potential impact of a government shutdown on programs and operations of the U.S. Department of Education (ED) and other Federal agencies.

At this point in time, there are three key points for you to know:

1. The Wisconsin Department of Public Instruction (DPI) will maintain operations during any Federal government shutdown.
2. Most federal education funds granted to LEAs (other than impact aid and school meals) are “forward funded,” meaning that the allocations were provided in July 2023 and LEAs are currently drawing down those funds. DPI will continue to pay LEAs’ claim reimbursement for federal grants submitted during the shutdown.
3. DPI will reach out to LEAs that will be affected by Impact Aid, and the U.S. Department of Agriculture (USDA) should be able to continue to pay claims until December 31, 2023, on school meals.

Background

Federal Fiscal Year (FFY) 2024 begins on October 1. If any of the 12 federal appropriations bills are not signed into law by the beginning of the fiscal year, Congress must pass a continuing resolution (CR) providing temporary funding that enables the affected Federal agencies to continue their operations and programs. If a CR is not enacted, the agencies must implement shutdown procedures and then operate in a severely curtailed manner, as described below.

Currently, Congress has not passed any of the FFY 2024 appropriations bills (which fund Federal education grants for the SY 2024-25), and likely, Congress will not complete action on appropriations, including the appropriations bill for the Departments of Labor, Health and Human Services, and Education, before October 1. In addition, there is some opposition to a CR in the House. Again, if a CR does not pass by October 1 (or, later, if a temporary CR lapses and is not extended, and Congress still needs to pass the full-year appropriations), a shutdown will go into effect. The last time the federal government shutdown was from December 2018 into January 2019.

What Happens under a Shutdown?

Under a shutdown, not all federal government functions actually cease. Programs and activities carried out with mandatory funding (that is, funding that is not subject to annual appropriations) and those that have been funded through previous years’ appropriations continue. Activities that, if suspended, would immediately threaten the safety of human life or the protection of property or infringe upon the constitutional responsibilities of the President will also continue. Lastly, individual agencies must determine which employees must carry out this limited set of programs and functions. These “essential employees” continue working during a shutdown.

Based on past experience, ED would designate only a small number of staff as essential – typically the head of each office, employees engaged in law enforcement activities (such as Office of Inspector General staff carrying out criminal investigations), and certain Federal Student Aid staff who work on programs receiving mandatory funding.

In the past, the Office of Management and Budget (OMB) issued guidance and other documents advising agencies and the public on the operation of agencies and programs during a shutdown. In addition, each Federal agency will develop its shutdown contingency plan.

Again, the DPI will maintain operations during any Federal government shutdown.

Impact on Federal Grant Programs

ESEA, IDEA, and Perkins Grants

Most ED funding for K-12 education flows to States and then local educational agencies by formula through such programs as ESEA Title I-A (Grants to Local Educational Agencies), Title II-A (Supporting Effective Instruction), Title III (English Language Acquisition), Title IV-A (Student Support and Academic Enrichment) and Title IV-B (21st Century Community Learning Centers), as well as IDEA Part B (Special Education Grants to States) and Career and Technical Education (Perkins) Grants.

Depending on the program, some or all the program’s funding is appropriated on a “forward funded” basis, meaning that the funding becomes available for drawdown by the State and local educational agencies (SEAs and LEAs) beginning on July 1 of the fiscal year (for instance, on July 1, 2023, for FFY 2023 funds). SEAs and LEAs will be able to continue using those funds, as well as carry-over funds from previous years if ED is shut down.

In addition, a portion of the funding for four programs (ESEA Titles I-A and II-A, IDEA Part B and Perkins) is appropriated on an “advance-funded” basis, meaning that the money does not become available until October 1 of the following fiscal year (see chart below). In other words, the FFY 2023 advance funded money will become available on October 1, 2023. Although the ability of SEAs and LEAs to access those funds could thus be affected if ED shuts down on October 1, we note that, at the beginning of a shutdown, Federal employees briefly engage in what is known as “orderly shutdown procedures.” We think it is highly likely that ED would release the October 1 formula funds as one of those procedures.
 

*The federal government will shutdown on October 1, 2023, if they do not have a budget for FFY 2024 which begins on October 1, 2023. However, states and LEAs do not receive FFY 2024 federal education grant funds until July 1, 2024.

Impact Aid

DPI’s School Financial Services Team will reach out directly to the twenty LEAs that receive Impact Aid to explain the effect the shutdown will have on these funds.

School Meals

Child Nutrition Programs, including school lunch, breakfast, and snack programs, are reimbursed 30 days after the end of each service month. Funding for these programs should be available through the first quarter of the federal fiscal year, through December 2023. As with ED, we expect USDA to provide additional information about funding for important programs during a government shutdown.

If you have any questions regarding the information in this memo, please contact Laura Adams, Policy Initiatives Advisor, at laura.adams@dpi.wi.gov.

We hope Congress can come together for all of us, especially our children. We stand with you advocating for solutions to this impasse.

Sincerely,