Federal Programs
Weekly Brief
Curated intelligence for district federal program leads
Provided by EnchantED LLC
ED Formally Backs Away from Racial Equity Enforcement — “Illegal DEI” Standard Now Triggers Federal Funding Threats to Districts
A major AP investigation published June 3 and widely circulated this week documents a fundamental shift in how the Department of Education’s Office for Civil Rights (OCR) is interpreting and enforcing federal civil rights law. Programs long used to close racial achievement gaps — including targeted professional development, supplemental staffing in high-need schools with high concentrations of students of color, and district-level equity frameworks — are now being categorized as “illegal DEI” by the administration and investigated as potential violations of the Civil Rights Act. The administration withheld more than $20 million from Chicago Public Schools when the district declined to end its Black Student Success Program, which expanded access to advanced coursework and reduced harsh discipline for Black students. A similar program in Los Angeles Unified is under comparable pressure. The administration’s position, per an ED spokesperson, is that “serving student needs and following the law are not irreconcilable mandates” — but civil rights attorneys describe the current enforcement posture as a structural inversion of decades of federal civil rights law. Separately, a February 2026 GAO report confirmed OCR dismissed approximately 90% of the more than 9,000 new discrimination complaints received from March through September 2025, including those alleging racial harassment and disability discrimination.
Indiana districts should immediately review any district-level equity frameworks, professional development programming, or targeted student support programs that are explicitly described using race or demographic identity in their grant applications, Title I consolidated plans, or public materials. This is not a call to eliminate effective programs — it is a call to ensure that the documented basis for those programs is grounded in educationally defensible, universally applied criteria (e.g., academic need, chronic absenteeism, low assessment proficiency) rather than demographic group membership alone. Programs structured around educational need that happen to serve predominantly students of color are on firmer legal footing than programs explicitly defined by student race or ethnicity. Consult your district’s legal counsel before making any changes to existing programs and before responding to any OCR inquiry. The proposed UGR’s DEI cost prohibition (see Update 02) would further codify this enforcement posture into the terms and conditions of every federal grant beginning October 1 if finalized.
OMB’s Proposed “Uniform Grants Regulation” — What Indiana Districts Must Understand Before the July 13 Comment Deadline
On May 29, 2026, OMB published a proposed rule rewriting 2 CFR Part 200 — the Uniform Guidance, also known as EDGAR — renaming it the “Uniform Grants Regulation” (UGR) and elevating it to binding federal regulation with a proposed effective date of October 1, 2026. Comments are due July 13. For Indiana K–12 districts, the most operationally significant provisions are: (1) Termination for convenience (§ 200.340) — agencies may end any discretionary grant at any time if it no longer aligns with current priorities; formula grants (Title I, IDEA Part B) are specifically exempted as statutory entitlements, but competitive grants are not; (2) Drawdown justification (§ 200.305(c)) — Indiana LEAs, as subrecipients under IDOE pass-through awards, would be required to submit brief justifications for each drawdown to IDOE, which must relay documentation to the federal agency; (3) DEI cost prohibition (§ 200.300) — federal award funds may not “fund, promote, encourage, subsidize, or facilitate” DEI policies, with scope unclear for PD, family engagement, and multilingual services; (4) Pre-issuance political review — every new discretionary grant must be reviewed by a political appointee before issuance, making peer review advisory only; and (5) Fixed-amount award elimination — lump-sum grant instruments are prohibited, requiring all new awards to shift to cost-reimbursable models.
Indiana districts receive virtually all of their federal education funds as subgrants through IDOE — a pass-through entity under the UGR framework. The drawdown justification requirement would add new documentation steps to every Title I, IDEA, and Title III periodic drawdown your district makes through the state system. Contact IDOE’s federal programs offices now to understand what Indiana intends to require at the subrecipient level and how the state will implement the pass-through obligations. Submit comments to regulations.gov by July 13 — focus on the drawdown burden on LEA subrecipients, the scope of the DEI prohibition as applied to instructional programs, and the lack of a transition period for in-flight multi-year awards. IDOE, AASA, and Indiana school law attorneys are expected to issue guidance in the coming weeks; watch for those resources before submitting.
House Full Appropriations Committee Passes FY2027 Education Bill 34–28 — 21st CCLC Preserved; Title I, Title II-A, and Title III Cuts Advance
On June 9, the House Appropriations Committee approved the FY2027 Labor, Health and Human Services, Education, and Related Agencies Appropriations Act by a partisan vote of 34 to 28. The bill advances to the House floor with all major education provisions intact from the subcommittee mark: Title I cut by $1.9 billion (approximately 12%); Title II-A and Title III eliminated entirely; and the proposed rescission of $1.6 billion in already-appropriated FY2026 Title II-A funds scheduled for October 1 distribution. Notably, 21st Century Community Learning Centers funding was preserved at the FY2026 level of $1.329 billion — the House rejected the White House’s proposal to fold it into the MEGA Grant block consolidation. The Senate is expected to take up its own FY2027 Labor-HHS-Education bill in July, though that schedule may change.
The bill now moves to the House floor. Even if it passes the full House, final enactment requires Senate agreement — and the Senate has consistently rejected comparable cuts in prior years. Indiana districts with active 21st CCLC grants can take some comfort that afterschool funding survived both the administration’s MEGA Grant proposal and the House subcommittee, preserving it at $1.329 billion. However, districts should not reduce contingency planning for Title I, Title II-A, or Title III based on this vote — the October rescission risk on Title II-A remains live and will be decided in conference. Continue to hold Title II-A October disbursements in abeyance for budget planning until the Senate acts.
Indiana Enacts Five-Year Charter School Moratorium Effective July 1 — Federal Equitable Services and Title I Implications for Districts
The Indiana General Assembly passed and Governor Braun signed legislation establishing a five-year moratorium — effective after June 30, 2026 — prohibiting authorizers from granting new charters in Indiana. The moratorium runs through 2031 and does not affect currently authorized schools. Additional charter-related provisions in the legislation require charter schools to provide transportation services to all students residing within the public school district in which the charter is located, and reduce the maximum charter school contract term from seven to five years. The moratorium follows years of concern from traditional public school advocates about enrollment loss and its effect on per-pupil funding formulas.
The five-year moratorium stabilizes the competitive enrollment landscape for Indiana traditional public districts — no new charter schools can open through 2031, which may slow enrollment decline in some districts. However, federal program coordinators should note three compliance-related implications: (1) the new transportation requirement for charter schools may generate requests from charter operators for assistance — charters are not entitled to LEA transportation services under Title I, and any cost-sharing should be reviewed by legal counsel; (2) the five-year contract cap may affect some districts’ equitable services planning for nonpublic schools if a charter school with nonpublic school characteristics has its authorization lapse — reconfirm the status of all charter schools in your service area in your consolidated application; and (3) enrollment stabilization may slightly improve Title I concentration-of-poverty calculations at the next census cycle if low-income student concentrations remain in traditional public schools.
Senate Expected to Advance FY2027 Labor-HHS-Education Bill in July — Historical Pattern Favors Restored Funding, But Senate Backstop Is Weaker This Cycle
Following the House full committee vote on June 9, the Senate Appropriations Committee is expected to advance its own FY2027 Labor-HHS-Education bill in July, though the schedule has not been formally confirmed. In both FY2025 and FY2026, the Senate version of this bill preserved Title I, Title II-A, and Title III at or near current levels, creating the bicameral contrast that ultimately forced a compromise closer to the Senate position. The FY2026 cycle resulted in a government shutdown starting October 1, 2025, a continuing resolution in November, and a final omnibus enacted February 3, 2026. Federal budget experts are already predicting a similar outcome for FY2027, with a possible continuing resolution beginning October 1, 2026, pushing final appropriations into early 2027.
A continuing resolution starting October 1, 2026, would generally hold federal education programs at FY2026 levels — which is protective for Title I, Title II-A, and Title III in the short term, but would delay FY2027 allocations and create planning uncertainty. Indiana districts should build a dual-scenario budget for FY2027: one using FY2026 enacted levels (likely under a CR scenario) and one modeling the House-proposed cuts. Brief your board and superintendent on both scenarios now. Do not wait for final enactment to begin contingency planning — the FY2026 cycle showed that a shutdown can arrive faster than expected.
ED Releases Updated Title IV-A Guidance on Allowable Uses and Evidence Requirements — AI Literacy and CTE Integration Explicitly Supported
The U.S. Department of Education released updated non-regulatory guidance this week clarifying allowable uses of Title IV-A Student Support and Academic Enrichment (SSAE) funds. The guidance explicitly supports using Title IV-A funds for AI literacy instruction, career-connected learning, dual enrollment, and registered apprenticeship partnerships — consistent with the competitive grant priorities finalized in April. The guidance also reiterates the evidence requirements for Title IV-A expenditures under ESSA, confirming that districts may use Tier 3 or Tier 4 evidence-based practices when supplemented by a strong local evaluation plan. New language also clarifies that Title IV-A funds may be used for cybersecurity professional development and student data privacy training for staff — an important update given the Canvas breach and ongoing ed-tech security concerns.
This guidance is directly actionable for Indiana districts completing or revising their FY2026 consolidated applications. If your district has not yet allocated Title IV-A funds for AI literacy, CTE pathway development, or cybersecurity training, the updated guidance provides the regulatory footing to do so now. Given that Title IV-A is among the programs left relatively intact in the FY2027 House bill, it is a relatively stable funding stream for these investments compared to Title II-A. Review your current Title IV-A spending plan with IDOE and consider whether amendments are appropriate before the consolidated application revision window closes.
School-Based Mental Health Services FY2026 Competition Finally Posted — Indiana Districts Have Approximately 60 Days to Apply
The long-anticipated School-Based Mental Health Services (SBMH) FY2026 grant competition was posted to Grants.gov this week, with applications due approximately 60 days from the date of posting. The competition targets high-need LEAs demonstrating documented ratios of school psychologists to students that exceed the National Association of School Psychologists’ recommended 1:500 ratio. Award amounts from prior cycles ranged from $750,000 to $2 million over multi-year periods, with the FY2026 competition drawing from $164 million in congressional appropriations. Applications are submitted through Grants.gov. Priority is given to LEAs with evidence of high rates of student trauma, mental health diagnoses, and low current psychologist-to-student ratios. The competition is administered by ED, not DOL.
Indiana districts that have been building their needs documentation — psychologist-to-student ratios, mental health referral data, community partnership letters — should begin drafting applications immediately. The 60-day window moves fast. Review your district’s current ratio against the 1:500 NASP standard and document any shortfalls with data from the 2025–26 school year. Given the Grad PLUS elimination’s impact on school psychology graduate pipelines, a strong narrative connecting the competitive environment for school psychologist recruitment to your documented need will resonate with reviewers. Confirm your Grants.gov SAM.gov registration is current before submitting — this competition uses Grants.gov, not GrantSolutions.
Begin drafting now. Document your psychologist-to-student ratio and mental health referral data from 2025–26. Connect your needs narrative to the Grad PLUS elimination’s impact on school psychology recruitment pipelines — reviewers will find this highly relevant. Confirm Grants.gov and SAM.gov are both active; this competition is administered by ED, not DOL GrantSolutions.
Window is open now. Funded with stable Title I school improvement dollars not subject to the FY2027 House rescission targeting Title II-A. Given Comprehensive Centers funding uncertainty, this is the most significant federal school improvement investment available to Indiana’s highest-need schools. Sixty applications were submitted for Cohort 5 — apply early.
This is not a funding opportunity — it is a regulatory comment period with direct consequences for every federal grant your district manages. Indiana districts should read or obtain a legal summary of the proposed rule, identify the provisions most likely to affect their grant operations (especially termination authority, drawdown justification, and DEI cost prohibition), and submit focused, specific comments describing real operational impacts. Coordinate with your district’s legal counsel and consider joining comments through IDOE, AASA, or your state school boards association to amplify impact.
New Title IV-A guidance released this week explicitly supports AI literacy, dual enrollment, and registered apprenticeship as allowable uses — all directly relevant to a CPE application narrative. Title IV-A is among the more stable funding streams in the FY2027 House bill. Confirm GrantSolutions registration is active and monitor for the deadline posting, which could come any week.
Understanding the Proposed UGR: What EDGAR Has Always Done — and What Changes on October 1 If OMB Finalizes This Rule
Most Indiana district federal program coordinators know EDGAR — the Education Department General Administrative Regulations at 34 CFR Parts 75–99 — as the set of rules that governs how ED grants are awarded, managed, and audited. What many may not know is that much of EDGAR’s substantive grant management framework was effectively replaced in 2014 when the Uniform Guidance (2 CFR Part 200) was adopted, consolidating eight separate OMB circulars — including OMB Circular A-87 (Cost Principles for State and Local Governments) and OMB Circular A-133 (Single Audit) — into a single government-wide framework. EDGAR itself was not eliminated; it continues to govern ED-specific program mechanics. But 2 CFR Part 200 is now the governing framework for allowable costs, drawdown procedures, procurement, subrecipient oversight, and audit requirements on every federal education grant your district holds.
What the proposed UGR changes — and what it does not: The UGR preserves the basic structure of current Uniform Guidance and does not overhaul cost principles wholesale. Section numbers largely remain intact. What it adds is political: mandatory pre-approval of discretionary awards by political appointees, new grounds for agencies to terminate grants mid-award, and explicit DEI cost prohibitions embedded in the terms and conditions of every new award. These additions give the executive branch tools to cancel grants based on policy alignment rather than noncompliance — a fundamentally different risk landscape than current rules.
What Indiana district program coordinators should do before October 1: First, inventory your current federal grants by award type. Formula grants (Title I, IDEA Part B) are distributed as statutory entitlements and are specifically exempted from the new discretionary termination authority in the proposed rule — a critical protection. Competitive grants are subject to termination under the new standard. Second, review the DEI cost prohibition language against your current program descriptions — particularly family engagement, professional development, and multilingual services funded with competitive or discretionary federal dollars. Third, consider submitting comments by July 13 focused specifically on the drawdown justification requirement and the termination for convenience standard — these two provisions are most likely to affect routine LEA grant management, and specific, operational examples from real districts carry significant weight in OMB’s review of public comments.
Watch for Senate Appropriations Committee activity on the FY2027 Labor-HHS-Education bill — Senate action is expected in July but could begin earlier. Also monitor the SBMH competition on Grants.gov for the exact application deadline now that it is posted. Indiana districts should use the coming weeks to prepare UGR comment submissions before the July 13 deadline and to begin SBMH application drafts. The Louisiana Senate runoff on June 27 will be a signal about the political dynamics heading into FY2027 conference negotiations. And with the July 1 effective date for OBBBA student loan changes less than three weeks away, any staff still on SAVE or pursuing PSLF who have not yet consulted studentaid.gov should do so this week.
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