America’s K-12 education system stands at a crossroads. After years of mounting pressures, such as declining enrollment, inflation outpacing spending, and exploding pension costs, school districts across the country now face their most severe funding crisis in decades. The expiration of $190 billion in historic ESSER funding has left districts scrambling to find ways to maintain the post-pandemic learning recovery, mental health support, and staffing supplements that those federal dollars (~5% of total state education budgets, on average) made possible.
Amid these pre-existing funding challenges, recent developments in the federal landscape have further exacerbated the pressures that school districts across the nation are feeling. Though it varies by state, federal funding typically accounts for 10-14% of K-12 education budgets. Recent impacts from the One Big Beautiful Bill Act (OBBBA) and the pending elimination of the Department of Education will serve to further impact the most vulnerable students. Federal funding dollars are often earmarked for targeted programs and grants that support students from low-income families, students with disabilities, and English language learners. These federal investments, though representing a smaller portion of overall education budgets, often provide essential services that help level the playing field.
In this moment of uncertainty, philanthropic organizations have an opportunity to step forward as champions of educational equity, providing strategic investments that not only address immediate needs but also strengthen the long-term resilience of our education system.
The impact of the One Big Beautiful Bill Act and executive impoundment on K-12 education funding
The One Big Beautiful Bill Act (OBBBA) includes $350 billion in cuts to education funding, including $50 billion specifically targeting K-12 programs. It also includes expanded private school voucher diversions that would further drain resources from public schools, which currently serve ~90% American students. Compounding these cuts, reductions to Medicaid funding directly impacts funding for special education services. Medicaid currently covers approximately $7.5 billion in annual funding for school-based services; that funding is often deployed to support the salaries of nurses and other school-health staff, mental/behavioral health services, technology and equipment, care coordination, and other critical screenings, evaluations, and early interventions. While the details of how Medicaid cuts will impact K-12 schools are still unclear, the scale of cuts is such that their impact is likely to create a cascade of challenges for students with disabilities who rely on these interconnected support systems.
Separately, the executive branch is spearheading a sustained impoundment campaign that seeks to eliminate the Department of Education and withhold funds previously allocated by Congress. The Supreme Court’s recent decision(s) to permit the administration to implement expanded impoundment authority while legal challenges are pending has only accelerated these threats, creating immediate uncertainty around program continuation. On July 17, the Senate passed a rescissions package back to the House, further legitimizing the claw back of funds.
Graphic 1: Funds facing impoundment
| Fund | Size | Impact |
| Title I, Part C: State Agency Program for Migrant Education
|
$375.6M
|
Serves approximately 192,000 students nationally, providing supplemental education services, health screenings, and support for highly mobile student populations
|
| Title II-A: Supporting Effective Instruction State Grants
|
$2.19B
|
Greater than 95% of all districts receive Title II-A funding; 80% of them report using funds for professional development, and 34% reported using funds to recruit, hire, and retain quality educators.
|
| Title III-A: English Language Acquisition Grants
|
$890M
|
Serves English language learners and recent immigrant students (~4.9M learners in 2021-2022), including ESL instruction and bilingual education programs, family engagement specialists who can communicate with non-English speaking parents, and professional development for teachers serving multilingual students
|
| Title IV-A Student Support and Academic Achievement Grants
|
$1.38B
|
Funds counseling, mental health services, STEM programming, and enrichment programs; many districts rely on this funding to support school counselors
|
The urgency of the moment
The impact of these funding disruptions isn’t theoretical—it’s happening right now. Summer programs have already been cancelled across the country. In Thomasville, Georgia, more than 300 children in Thomas and Grady counties lost access to meals, care, and education when the Community Resource Center cut its summer program three weeks short due to frozen federal funds. In Gadsden City Schools in Alabama, officials face no choice but to shutter their after-school program serving more than 1,200 low-income students if federal funds aren’t released.
These immediate closures represent just the beginning. While legal challenges to the funding freeze continue, the time-sensitive nature of education means that solutions cannot wait for lengthy court proceedings. The academic year does not pause for political resolution, and vulnerable students who have historically relied on federal programs for additional support will feel the effects most acutely.
What philanthropies can do to meet the moment
This crisis presents an opportunity for philanthropic organizations to provide leadership and stability in the face of uncertainty. The scale of need requires strategic thinking about where private investment can be most effective in supporting students and strengthening systems. Students and educators are likely to feel the impacts of these funding changes quickly. The sooner philanthropies can drive uptake of quality supports and long-term system strengthening, the better.
Near-term solutions to provide interim support
Philanthropic investment can mitigate the risk posed by funding cuts in the short-term by bolstering support for vulnerable students and educators.
- English Language Learner (ELL) Support: With Title III funding at risk, philanthropies can invest in programs that provide comprehensive multilingual resources for students and families, including curriculum support, professional learning partnerships, and family engagement tools. Investing in curriculum products that meet industry standards for ELL support (e.g., ELSF’s benchmarks of quality) offers a streamlined product offering between core and supplemental materials and engagement with family members. Many of these products also offer bundled professional development materials to best support teachers as they support their multilingual students. There is also opportunity to directly support the scaling of family engagement tools that provide real-time translation services and culturally responsive communication tools between parents, teachers, and students.
- Teacher Retention and Development: With teacher shortages accelerating, philanthropies can support innovative professional development models that build internal expertise within districts and support long-term sustainability of the profession. This includes mentorship programs, peer learning networks, and technology solutions that extend teacher capacity without requiring additional staffing.
- Strengthening School-based Health Services Infrastructure: With Medicaid cuts threatening the $7.5 billion in annual funding for school-based health services that support students with disabilities, philanthropies can invest in direct service provision models that maintain essential Individualized Education Program (IEP)-mandated services. This includes funding mobile health units with embedded healthcare professionals (occupational therapists, physical therapists, speech-language pathologists, school nurses), telehealth platforms specifically designed for special education services, and equipment loan programs for assistive technology and specialized medical devices that students with disabilities require for their education. While these efforts would neither address root causes nor provide systemic solutions, they may provide crucial relief for students and families in the near-term.
Long-term system strengthening
While an immediate crisis response can help to lessen the near-term impacts, this moment also calls for investments in long-term system strengthening that will make education more resilient to future funding disruptions.
- Equitable Funding Reform: Supporting advocacy for state-level funding reform can help create more stable financial foundations for education. This can include supporting state coalition building or supporting organizations that provide states with technical assistance on funding formula design. There is also an opportunity to partner with think tanks and researchers to conduct state-specific analyses or with grassroots groups to help mobilize communities around funding reform.
- Strategic Resource Allocation: There is growing interest in supporting school systems to make strategic decisions about resource allocation, providing schools with the necessary information and data to allocate their limited resources to maximize student outcomes. Philanthropies can fund the development of decision-making tools that help administrators model different budget scenarios and their impact on student outcomes, or can partner to scale solutions to help districts analyze their spending patterns compared to high-performing peers.
- Community Schools Models: Philanthropy has historically made effective investments in community schools’ approaches that integrate academic programming with health services, family support, and community engagement. These models have the potential to be especially impactful as legislation like OBBBA cuts Medicaid funding and makes access to healthcare and other essential services more challenging for families. Funders can support backbone organizations that provide critical coordination efforts in local communities or support national advocates for the community schools movement.
Looking ahead
Every child deserves a quality education, regardless of what is happening in the federal landscape. While the current crisis presents unprecedented challenges, history shows us that crises can also create opportunities for transformative change. Philanthropy has a storied history of providing critical gap-filling support, spurring long-term resilience in critical social infrastructures, and catalyzing innovation during times of upheaval. Each of these opportunities is present in the current moment if philanthropy commits to action. Our students may depend on it.