Key Funding and Policy Changes to Monitor

Congress has passed 11 of the 12 bills needed to extend the budget through FY 2026. DHS remains in shutdown while negotiators work on funding levels. While the Trump administration encouraged massive budget cuts and extended agency authority, Congress pushed back on the cuts and generally maintained spending levels similar to previous years. The FY 26 bills do reflect a focus on Trump administration priorities, however. The bill extends funding for workforce opportunities, domestic critical mineral production, and infrastructure. The new budget also increases grant oversight and tightens rules for the indirect cost rate. While the budget bills have passed, it will likely be a few months until these programs and funding levels are affected and begin. Agencies also maintain some discretion over funding levels and programs, despite the new restrictions. We will continue to monitor any changes to funding, program levels, grants, and reporting requirements. The following highlights will help you as you craft your grant applications:

Changes to Indirect Cost Rates and Grant Administration

• Changes to Grant Administration: Agencies are now required to provide more frequent and detailed reports on how grant funds are being spent, who receives sub-awards, and the outcomes achieved. In this new bill, Congress prohibits agencies from redirecting or repurposing grant funds administratively. The bill also includes language rescinding the ability for prior-year unspent funds to carry funds forward into new grants. Finally, agencies must conduct more oversight, including compliance audits and performance monitoring.

• Indirect Cost Rates Changes for DOE: The new bill prevents recipient agencies from imposing unilateral changes to indirect cost rates; recipients may continue using the negotiated indirect cost rates. The bill also bars agencies from designing or implementing new systems that could create new indirect cost categories, raise allowable overhead, and shift costs between overhead and direct charges.

Department of Energy Funding

• $3.1B for EERE: Congress has prioritized research and development on geothermal activities within EERE.

• $25M for Grid Deployment: These funds will go towards grid resilience against natural disasters, modernizing transmission and distribution systems, and expanding transmission lines.

• $1.785B for Nuclear Energy Activities: Money for nuclear activities include funding for ensuring a domestic supply chain for nuclear fuel, strengthening U.S. nuclear stockpiles, and research and development.

• $35M for Title 17 Innovative Tech Loan Guarantee Program: Funds for this project continue, with increased eligibility to include projects that boost grid reliability, energy supply, and critical minerals

• $97M for Community Project Funding: Allocated under DOE authority to support various energy projects and initiatives.

• Applied Grid Transformation Solutions: Funding for competitively awarded public-private partnerships, testing and validating innovative advanced grid technologies, enhancing testbed capabilities, and expanding technical assistance to transmission and distribution providers.

ARC, EPA, and Water Funding

• $200M for ARC: The recommendation includes not less than $7.5M to continue the program of high-speed broadband deployment in distressed counties within the Central Appalachian region that have been most negatively impacted by the downturn in the coal industry.

• $4.4B in State and Tribal Assistance Grants: These grants include capitalization grants for Clean Water and Drinking Water State Revolving Funds, including funds for green infrastructure and water quality protection.

Military Construction and Veterans Affairs Funding

• $1B in Military Construction: This includes $730 million for the Energy Resilience and Conservation Investment Program, which funds over a dozen microgrid and power resilience facilities to improve installation energy reliability and security

• $342M for Rural Health: To support improved access to care, including expanded access to transportation and telehealth

Agriculture and Rural Development Funding

The agriculture funding bill includes a recommendation for USDA, HUD, and EDA to align requirements for economic development programs and issue joint guidance to streamline the application process.

• $18M in Grants and Loans for Rural Business: Funding for these programs will focus on rural business and industry programs to promote economic growth

• $90M for ReConnect Program: This funding will work to increase access to broadband connectivity in unserved and underserved rural communities, targeting areas of the country with the largest broadband coverage gaps

Department of Justice, Science, Commerce, and Interior Funding

• $1.25B for Scientific Research: Continued allocation from CHIPS for semiconductor-related projects and workforce development for NIST.

• $466M for EDA: Continued funding for EDA, despite initial cuts proposed: similar funding levels of Build to Scale, EAA, and Public Works

• $51M for NTIA: This funding includes $42B for Broadband Deployment, including $21B in non-deployment funds, and $1B in Digital Equity Grants

• 3% Reduction in NSF: This cut maintains funding for research but does reduce the number of new research project grants and cuts education programs slightly.

• $55M for Office of Justice Programs Grants: Funding here supports the following programs: Byrne Memorial Justice Assistance Grants, State Criminal Alien Assistance, victim services, crime prevention, and community violence intervention.

• $375M for Juvenile Justice Programs: Money allocated here will go to mentoring, delinquency prevention, missing children programs, and juvenile indigent defense.

• $800M for Community Oriented Policing Services Programs: This program will support mental health and wellness, anti-methamphetamine and opioid initiatives, school violence prevention, and law enforcement technologies.

• $285 million for the Office of Surface Mining Reclamation and Enforcement: Funding allocated here will be used to reclaim abandoned mine lands and to regulate active coal mines.

• $2.5 billion for the Bureau of Indian Affairs: Funding for social services, housing improvement, and public safety and justice programs

• $1.4 billion for Bureau of Indian Education: Maintains funding for Elementary, Secondary, and Post Secondary programs.

Transportation, Housing, and Urban Development Funding

• Priorities for DOT Grant Applications: DOT will prioritize applications that demonstrate strong local support, deliver measurable public benefits, and show readiness for timely and cost-effective implementation. Congress encourages the Secretary of Transportation to prioritize applications for regions with significant oil and gas activity to improve public safety, strengthen critical infrastructure, and support the efficient movement of goods and services essential to the energy sector.

• Efficiency for Grant Reviews: Congress directs DOT to brief the House and Senate Committees on Appropriations within 120 days of enactment of this Act, detailing the scope of the backlog, how any staffing shortfalls may contribute to this delay, and the Department’s plan to improve grant processing timelines and capacity. Additionally, Congress directs DOT to continue efforts to reduce permitting delays and improve project delivery efficiency across federally-funded transportation programs.

• Distressed Coal Communities: Funds will go to the Central Appalachian region to help communities and regions that have been affected by job losses in coal mining, coal power plant operations, and coal-related supply chain industries

• $35 Million for the Small Shipyards Program: This funding supports competitive grants for capital improvements, equipment upgrades, and workforce training projects aimed at enhancing efficiency, quality, and productivity in small U.S. shipyards.

• $64 Billion for Federal Highway Administration: Funding includes $63 billion in highway trust fund programs and $879 million for priority infrastructure needs, including Tribal transportation and truck parking projects

• $22 Billion for Federal Aviation Administration: This is $1.2B above FY25 funding and includes $10 billion to fully fund air traffic control operations and allow the FAA to hire 2,500 air traffic controllers to replace the retiring workforce.

• Rural Tribal Infrastructure Advancement Program: There is no further funding for this program.

• $103M for PIDP Funding: $64M of that funding is provided for community project funding in accordance with the table at the end of this report. Congress requests a report within 60 days of enactment of this Act identifying what steps MARAD is taking to streamline the process and expedite awarding

• Administration of Section 402 and Section 405 Highway Safety Grant Programs: NHTSA plans to implement changes to the administration of the 402 and 405 grant programs that will streamline their administration and reduce the reporting burden on states.

• Distressed Coal Communities: Funds will go to the Central Appalachian region to help communities and regions that have been affected by job losses in coal mining, coal power plant operations, and coal-related supply chain industries

Department of Labor, Education, and Health and Human Services Funding

• Score Transparency: Congress directs DOL to provide them with grant scores for each applicant for competitive funding evaluated; this is to include all aspects of scoring included in the FOA.

• Priorities for DOL Grant Applications: DOL will prioritize grant applications in industries and occupations that exceed the average earnings of a high school graduate based on the Bureau of Labor Statistics (BLS) Occupational Employment and Wage Statistics when making competitive grant awards and when not inconsistent with authorizing statutes. DOL, in collaboration with the Department of Education, will work with industry partners, workforce groups, and nonprofit experts to better support pathways for mechanics and technicians in innovative automotive fields.

• $875M for Adult Employment and Training Activities: Funding for these programs will focus on helping job seekers access employment, education, and training

• $948M for Youth Employment and Training Activities: This funding aims to address structural barriers to accessing crucial workforce opportunities

• $55M for Workforce Opportunities for Rural Communities: An increase of $5M to provide enhanced worker training in the Appalachian, Delta, and Northern Border regions. An additional $5 million in funding is allocated this year for the Workforce Opportunity for Rural Communities program. This funding is specifically meant for multigenerational workforce training in collaboration with institutes of higher education and workforce development.

• $25M for Cybersecurity and Software Development Employment Opportunities: Funding will go to institutions of higher education to better train the upcoming workforce in cybersecurity opportunities

• $10M for Career Pathways for Youth: Funding for employment, training opportunities, and early workforce readiness demonstrates an increase from previous funding years.

• $105M for YouthBuild: WIOA reformed the YouthBuild program to prioritize the employment and educational outcomes of program participants.

• $65M for Strengthening Community College Training Grants: Help community colleges scale affordable, high-quality workforce training to meet employers’ and workers’ skill development needs in critical industry sectors.

• $285M for Degree Apprenticeships: Encourages DOL to collaborate with the Department of Education to support the establishment of apprenticeship degree programs at 4-year institutions of higher education, aligning workforce development efforts with post-secondary education in industries such as advanced manufacturing, information technology, healthcare, and energy. The Committee includes $100M for apprenticeship state grants.

• $65M for Strengthening Community College Training Grants: These programs are designed to build partnerships between community colleges and employers to address workforce shortages.

• Health Professions Workforce: Congress directs HHS to conduct a comprehensive study documenting successful programs utilizing skills-based training platforms and public-private partnerships that enhance healthcare workforce development through online learning platforms.

• $74M for Rural Hospital Flexibility Grants: Within this total, the Committee includes no less than $5M for the Rural Emergency Hospitals Technical Assistance Program and up to $23M for the Small Rural Hospital Improvement Program.

Funding for Defense

• Expands the capabilities of the Defense Industrial Fund: The NDAA allows the Secretary of War to use contracts, grants, cooperative agreements, and other transaction authorities and incentives to encourage the private sector to develop capabilities essential for the domestic industrial base

• Prioritizes Domestic Critical Mineral Production: The NDAA seeks to improve processing capabilities, supply chain operations, and workforce opportunities for critical minerals

Legislative Branch Funding

This bill provides a base of $7B in discretionary funding with an added $203.5M to implement security enhancements for members of Congress.  

State and Foreign Operations Funding

This bill provides a base of $50 billion in discretionary funding to maintain operations, provide international security assistance, humanitarian assistance, and support international religious freedom.

Department of Homeland Security Funding*

DHS remains in shutdown, following the expiration of the CR on February 14. As budget negotiations continue, these are the following programs are funded under DHS and may see changes with the upcoming FY 2026 budget bill:

• Assistance to Firefighters Grant

• Emergency Management Performance Grant Program

• Flood Mitigation Assistance

• Pre-Disaster Mitigation

• Port Security Grants

• State and Local Cybersecurity Grants