Earlier this week, the U.S. Department of Education (ED) announced that it has determined the California Department of Education is in “continued noncompliance” with the Family Educational Rights and Privacy Act (FERPA). According to the Department’s press release, California now has two weeks to agree to a set of corrective conditions outlined by ED.
If California does not agree to those conditions within that window, the Department states that it could pursue enforcement actions, including withholding future federal education funds, seeking repayment of previously awarded funds, or taking other enforcement steps at the Secretary’s discretion, as permitted under federal law.
That threat alone makes this development notable. But the broader implications extend beyond California and FERPA.
A Shift Toward “Technical Compliance” Reviews
This action signals a broader shift in how ED may approach federal oversight in 2026 and beyond. Rather than framing issues as policy disagreements, the Department appears to be leaning into technical compliance reviews—asking whether states are meeting all applicable statutory and regulatory requirements and using any failure to do so as a basis to intervene.
This approach lowers the bar for federal intervention. It doesn’t require sweeping new regulations or congressional action. It relies instead on existing enforcement authority, coupled with an aggressive interpretation of the consequences for noncompliance.
Notably, in this case, ED’s investigation did not begin with a complaint or documented factual dispute. Instead, the Student Privacy Policy Office opened an investigation in March 2025 based on its interpretation of California statute AB 1955 (2024), raising questions about how statutory interpretation or presumptions of noncompliance may serve as the basis for federal investigations.
The Funding Question Looms Large
One open question is whether agencies will use this approach to throttle domestic spending in a way that the Office of Management and Budget (OMB) cannot. Last year, OMB withheld/impounded billions because the FY2025 Continuing Resolution was not explicit about every account. To avoid similar disruptions in FY2026, Congress added new language to the appropriations bills to clarify amounts and allocation timing. Now, assuming Congress completes the work, OMB cannot withhold funds at its discretion. But agencies can—and will—test the bounds of their fiduciary duties to oversee the programs and enforce sweeping remedies for noncompliance and misuse. Add this to the list of issues to be litigated in 2026.
Why This Matters for States
Regardless of how the California case resolves, state education agencies should be paying close attention. This episode raises the possibility of a future in which policy disagreements are reframed as compliance failures, with funding implications attached.
In other words: states may see more reviews and more pressure to align quickly in response to federal compliance determinations.
We are continuing to dig into the details of the Department’s findings and the specific conditions California has been given. We’ll share more as that picture becomes clearer. For background, we previously analyzed the initial federal investigation when it was first announced.
If you’re thinking through what this could mean for your state, or how to prepare for a more aggressive federal compliance environment, reach out to us.
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.
