On May 30, the U.S. Department of Education released its detailed summary of the FY 2026 budget proposal, which would fund the agency at $66.7 billion—a $12 billion reduction (-15.3%) from FY 2025. On June 3, Secretary of Education Linda McMahon appeared before the Senate Appropriations Subcommittee to provide further details on the administration’s proposed changes and priorities.

Key Highlights from the Budget Proposal

Preserving Core Formula Grants

The proposal maintains level funding for Title I grants ($18.4 billion) to support schools serving low-income students, and increases funding for IDEA grants to states by $677.5 million (to $14.9 billion). The Preschool Grants program and Special Education National Activities would be consolidated into the broader IDEA program, providing states with more flexibility in allocating special education funding.

New K-12 Funding Model

A central feature of the proposal is the creation of the K-12 Simplified Funding Program (K-12 SFP), which would consolidate 18 existing K-12 programs into a single $2 billion formula grant to states. Programs proposed for consolidation include:

  • 21st Century Community Learning Centers (afterschool and summer learning programs)
  • Supporting Effective Instruction State Grants (Title II-A)
  • Education for Homeless Children and Youth
  • Comprehensive Literacy State Development Grants
  • Arts in Education
  • Full-Service Community Schools
  • English Language Acquisition State Grants
  • Rural Education Achievement Program
  • Magnet Schools Assistance, and others

This consolidation represents a significant funding reduction—over $4.5 billion, when compared with current levels—and would shift more decision-making power to states. 

Higher Education Adjustments
The maximum Pell Grant award would be reduced by nearly $1,700 to $5,710 for the 2026-27 award year—a cut of nearly 23%. The Department has cited concerns about the long-term sustainability of the Pell program without additional funding from Congress.

The proposal also reduces Federal Work-Study funding by nearly $1 billion, while shifting a larger share of student wages to employers. Under the plan, employers (often colleges and universities themselves) would be responsible for 75% of student wages, reversing the current structure where the federal government covers up to 75%.

Secretary McMahon’s Testimony

During her testimony, Education Secretary Linda McMahon described the budget as a reallocation of resources to better support state and local decision-making. She emphasized efforts to eliminate duplicative programs and reduce administrative burdens, while maintaining funding for core formula grants and expanding opportunities for families to choose educational pathways that best suit their needs.

Secretary McMahon faced pointed questions from both Democratic and Republican senators:

  • Sen. Tammy Baldwin (D-WI) criticized the plan as a move to “illegally impound congressionally appropriated funds and dismantle the Department of Education,” warning that “students will pay the price.”
  • Sen. Katie Britt (R-AL) focused on the proposed $50 million increase for charter schools, asking how these funds would be used to expand options in rural and underserved communities.
  • Sen. Dick Durbin (D-IL) pressed McMahon on cuts to the borrower defense branch, arguing that these cuts would limit support for students defrauded by for-profit colleges. 
  • Sen. Shelley Moore Capito (R-WV) asked how the Department would maintain protections for Jewish students on campuses amid proposed cuts to the Office of Civil Rights. McMahon responded that recent actions at Columbia and Harvard show the administration is serious about combating antisemitism, but concerns about oversight capacity remain.
  • Sen. Baldwin also flagged $13 billion in unallocated funds from prior appropriations, calling this “unprecedented and unacceptable” and suggesting the administration was withholding funds from students and families across the country. [The Hill]

Looking Ahead

This budget proposal represents a significant shift in how federal education dollars would be allocated, if enacted. While these cuts align with the President’s push to “wind down” the Education Department, we anticipate significant pushback in Congress, especially given the broad coalition of education advocates and some conservative groups expressing concern about the impact on local schools and students.

As the budget process moves forward, Congress will review these proposals through hearings and appropriations discussions. Secretary McMahon is also scheduled to testify before the House Education and Workforce Committee on June 4, continuing the dialogue with lawmakers.

At Whiteboard Advisors, we are closely monitoring these developments and will continue to provide updates on how changes to federal funding priorities could impact states, districts, and students. Got questions? Let’s get in touch.

This article is sourced from Whiteboard Notes, our weekly newsletter of the latest education policy and industry news read by thousands of education leaders, investors, grantmakers, and entrepreneurs. Subscribe here.