Potential FY26 Government Funding Scenarios

Over the last few weeks, Congress has gotten over two major hurdles that have an influence on FY26 appropriations negotiations and possible legislation: the passage of the Big Beautiful Bill, the work on which was sucking the air out of everything else on Capitol Hill, and the $9 billion rescissions package for foreign assistance programs and the Corporation for Public Broadcasting. With these two markers in the rearview mirror, it’s a good time to game out some FY26 funding predictions. 

From the top, it’s important to make clear that there’s a high likelihood a short-term Continuing Resolution (CR) will be passed at the end of September. Neither party will have their full appropriations bills passed, or even written, and if nothing else, the chambers will need more time to find agreement.  

There are two major political dynamics that will play a major role in if and how the government is funded come October:  

• Whether Democrats make good on their threat to walk away from FY26 negotiations in response to rescissions (and the timing of that).   

• How long Republicans are willing to continue funding the government at “Biden-era levels” via a CR, or if this fall will be the moment they cut a deal. More on these dynamics later. 

Where things stand
This week, the House National Security, Department of State, and Other Programs (formerly SFOPS) released its FY26 appropriations bill, which was marked up on July 15 with little fanfare. The bill represents a 22% overall cut to the Department, and Democrats voted unanimously against it. 

Despite this concerning top-line number, the Alliance was pleased to see the Educational and Cultural Exchanges (ECE) line for ECA, which came in at $700.946 million; a far cry from the President’s requested $50 million for FY26.  

In addition to this robust ECA funding proposal, there is also language in the bill requiring OMB to apportion funds to ECA within a set period of 60 days after the bill’s passage. This signals that there is bipartisan awareness of the current hold OMB has on FY25 awards across the government, and they want to use the appropriations process to put in statute some guardrails. The Senate Appropriations Committee is still working on their bill, but the word is that they are pursuing similar funding levels and language to the House. 

Whether either of these bills make it out of committee and to the House or Senate floor remains a big question mark. But the House’s mark signals that there is still strong bipartisan support for ECA and its programs, which we can work with. 

The politics of it all
As mentioned above, there are two important political dynamics playing out that will have an outsized impact on if and how the government is funded in FY26. 

First, both Senate Minority Leader Chuck Schumer and Appropriations Vice Chair Patty Murray have said publicly that if the rescissions package passes, Democrats might walk away from FY26 negotiations. Now that rescissions have passed, it remains unclear if they are going to double down on that threat, or if they are going to wait and see what the Administration’s next move is.  

This is a big decision for Schumer, given the fiasco that was the CR fight in March that resulted in major backlash from the Democratic base. Does it make sense for Democrats to stop the appropriations process now, two months before the deadline, over this relatively small package, or should they hold their cards and wait for the Administration’s next play? 

Next week, Senator Thune is going to send up a test balloon by teeing up a vote on the Military Construction-Veterans Affairs (MilCon-VA) appropriations bill on the floor, which was voted out of committee with a large bipartisan margin. Between now and that vote, Minority Leader Schumer has to decide whether his caucus is going to hold strong on their threat to shut down the FY26 process. All of this comes as OMB Director Russ Vought said yesterday that appropriations should become less bipartisan, a sentiment that is strongly opposed in the Senate. If I were Senator Schumer, I’d allow my vulnerable members who need to vote against appropriations bills to vote against MilCon-VA next week, but I would make sure there are 7 votes to get it through the chamber. It doesn’t make sense for the Democrats to start their fight now; there are two months left until the funding deadline, and still a strong possibility that more rescissions packages are sent to the Hill. 

Second, there is frustration among Republicans in Congress that the government remains funded by a CR representing the previous Administration’s spending priorities and levels. The conundrum that they are faced with is that any attempt to break away from those levels require bipartisan agreement and 60 votes in the Senate. This would require negotiating with Democrats, which would buck the President’s desires for massive, across-the-board spending cuts. 

It seems very likely that any future rescissions package will be much larger than $9 billion, and very likely include FY25 funds from ECA. 

Consequences of a shutdown
Generally, shutdowns are bad for the government, its employees, and its critical day-to-day functions. The current climate on Capitol Hill makes it feel like – right now at least – there might be a real possibility of a shutdown in the fall. That chance only increases if the Administration sends the Hill more and larger rescissions requests, and it only increases further the later in the calendar those requests are made.  

Rescissions packages have a 45-day clock for passage once they go to the Hill, and if they don’t clear both chambers, the Administration is required to spend the funds as appropriated. The tactic OMB could take is sending huge rescissions packages to the Hill in mid-August – while Members of Congress are on recess – with a deadline pushing up against the end of the Fiscal Year (and expiration date of those funds). This would be a “pocket rescission,” and certainly add fuel to the fire of the Democrats’ threat to shut down FY26 talks. 

In this climate, however, a shutdown would be even more risky than in a typical year, a factor Democrats are surely considering. This Administration’s goal is to gut the federal workforce and agency programs, and a shutdown could give them carte blanche to do exactly that. In a government shutdown, the executive has broad authority to declare what is deemed “essential” and “non-essential” in government. A shutdown could provide this Administration with the opening it needs to run the parts of the government it wants to run without consideration for Congress or the courts. 

So what will happen?
With midterm elections approaching, it would be in Congress’ interest to work together on government funding for FY26 and reach an agreement between the chambers and bridge the cavernous differences between the parties.  

Longer term, the politics of a shutdown are bad, and the potential reality of a shutdown could be much worse. Many see the politics of ongoing government funding via CR as bad, but it would be less bad for ECA and its programs than a shutdown. While extremely unlikely, at least immediately at the start of the fiscal year, an omnibus or set of minibuses outlining new FY26 spending would send a strong message from the Hill to the Administration about Congress’ power of the purse, especially if whatever they agree upon looks like the House mark for ECA. Even with the Big Beautiful Bill and the first rescissions package behind us, there is still a lot that needs to happen before we can make better predictions about how the government will get funded in FY26. 

House National Security, Department of State, and Related Programs Subcommittee bill funds ECA at $700.95 million

The House National Security, Department of State, and Related Programs (formerly SFOPS) Subcommittee released its FY26 appropriations bill, and the proposed topline funding amount for the Bureau of Educational and Cultural Affairs (ECA) is $700,946,000. 

This amount is significantly higher than the 93% cut proposed in the President’s Budget Request and far more than what was anticipated from the House. This shows that in a political climate focused on sweeping cuts, support for ECA’s international exchange programs remains strong in Congress. 

The bill proposes a 22% cut to the Department of State budget as a whole, so it’s still damaging to U.S. diplomacy, and there are Members of Congress who will understandably be dissatisfied with it. You can read the bill, the respective statements and supplementary documents here: 

• A summary of the bill is available here. 

• Bill text is available here (ECA section on page 4). 

• HAC majority press release is attached here. 

• Democrats posted fact sheet here.  

• HAC Democrats press release is attached here. 

For ECA, though, here’s what this means: the conversation about FY26 is completely new. The President’s Budget Request can be thrown out the window. There is still much more to learn about this bill, including toplines for each program. The subcommittee markup for this bill is tomorrow, Tuesday, July 15 at 11:00am.  

Action Alert: Tell Congress to reject President’s budget proposal and support funding for international exchange programs

The Alliance for International Exchange, on behalf of its more than 90 U.S.-based members who implement international exchange programs is launching a campaign to urge Members of Congress to reject the President’s FY26 budget proposal and support funding for international exchange programs. 

On Friday, May 2, the Trump Administration released its FY26 “skinny” budget, which is a high-level overview of the president’s priorities for the upcoming fiscal year's budget process. The budget proposes to cut State Department international exchange programs by 93%. If Congress enacts this budget proposal, it would essentially eliminate the Bureau of Educational and Cultural Affairs (ECA) and leave exchange programs, the U.S. organizations that implement them, and the jobs of more than 8,000 exchange professionals around the country at risk. 

Exchange programs are a proven investment in America – an investment in the economy, in American communities, and in the U.S.’ foreign policy influence and interests. They are vital to making America safer, stronger, and more prosperous and should continue to be funded as such. 

We encourage all exchange champions to take action today and urge Congress to support thousands of Americans and communities by ensuring funding for international exchange programs.   

Lessons Learned: The First 100 Days of the Second Trump Administration

International exchange programs make America “safer, stronger, and more prosperous.” This has been an Alliance refrain since Secretary of State Marco Rubio first coined the phrase during his Senate confirmation hearing on January 15. It has fueled our advocacy over the past 100 days as we’ve worked to thaw a funding freeze, navigated Executive Orders and leaked memos impacting exchanges, prepared for expected proposed cuts to ECA funding, and so much more. 

Below are four lessons from the past 100 days that we at the Alliance are reflecting on to inform our advocacy efforts going forward. 

• Lesson 1: Patience, Patience, Patience. With so many threats facing exchanges during the first 100 days, we’ve prioritized gathering the information and support we need to ensure we’re most effective when we act. A perfect example of this was our advocacy efforts on the ECA funding freeze. You can read more about this effort here. 

• Lesson 2: [Information] Sharing is Caring. Information, the receiving and sharing of it, has been fundamental to our advocacy work over the past 100 days. The more people are aware of the threats facing international exchange programs, the more they can make their voices heard and make positive change. Over 25,000 letters were sent to Congress through our ECA funding freeze campaign, ultimately leading to the flow of funding to exchange implementing partners. 

• Lesson 3: The Power of Coalitions. Our ability to partner with fellow coalitions throughout these 100 days has amplified our impact on the issues we engage in daily. We are especially grateful to our colleagues at The Forum on Education Abroad, NAFSA, and the U.S. for Success Coalition for their collaboration in advocating against the ECA funding freeze and on behalf of international students and scholars. 

• Lesson 4: The Process Still Exists. Despite so much uncertainty, the Alliance is continuing to engage in the appropriations process to ensure strong support for international exchange programs within Congress. We’ve submitted 132 exchange funding appropriations requests and are meeting key House and Senate leadership to make the case for exchanges. 

We are deeply grateful for all those who have collaborated with us over the past 100 days to promote and protect international exchange programs. Special thanks go to our members, supporters, fellow associations, and all those exchange champions that made their voices heard on behalf of exchanges.  

The Department of State Memo That Leaked: Let’s Talk About the Budget Process

This week in Washington began abuzz, first with rumors and speculation about a damaging memo possibly coming from the Department of State, and then real alarm when The Washington Post published a piece about a memo that was leaked to them proposing to slash the agency’s funding by nearly half, including the elimination of the Bureau of Educational and Cultural Affairs (ECA). The coverage of this memo has been breathless and dire. We at the Alliance saw the full memo, and it is very concerning. 

What the press only mentions as a footnote, though, is this: the leaked memo is a step in the beginning of the very long process that exists to write, authorize, and appropriate the federal funding legislation. The memo in and of itself has no immediate or tangible impact on the Department of State, ECA, or Alliance members’ programs. Below is an overview of the long, arcane, and complex process that explains why this memo is nothing more than a memo right now.

“Regular Order”, a.k.a. the way things should be done and aren’t

The Congressional budget process was established under the Congressional Budget and Impoundment Control Act of 1974, and that process takes place after the President’s Budget Request (PBR) is submitted to Congress. Below is a chart that outlines what the “regular order” of the federal budget process should look like each year. 

On or before: Action to be completed:

October-December Federal agencies create budget requests and submit them to the White House Office of Management and Budget (OMB) OMB refers to the agencies’ requests as it develops the budget proposal for the president.

First Monday in February The president submits the budget request (PBR) to Congress.

February 15 Congressional Budget Office (CBO) submits report to House and Senate Budget Committees.

Within 6 weeks after the PBR is submitted Authorizing committees submit views and estimates to Budget Committees for each federal agency. House and Senate Budget Committees hold hearings on the PBR.

April 1 Senate Budget Committee reports concurrent resolution on the budget, which outlines targets for congressional committees to propose legislation directly appropriating funds or changing spending and tax laws. The budget resolution is not law and does not get signed by the President.

April 15 Congress completes action on the budget resolution, meaning the House and Senate agree on exact text language.

May – June House and Senate complete action on 12 appropriations bills guided by the targets outlined in the budget resolution. These bills do become law by going to the president for signature. Appropriations bills are the vehicle through which federal agencies receive funding.

October 1 Fiscal Year begins

Source: House Budget Committee: https://budget.house.gov/about/budget-framework/time-table-budget-process/; Center on Budget and Policy Priorities: https://www.cbpp.org/research/federal-budget/introduction-to-the-federal-budget-process  

Since the Congressional Budget Act of 1974 was passed, Congress was able to complete this process for the first 23 years, however since 1999, they have failed to complete it the majority of the time. As Congress become more polarized, agreement on any legislation, but especially appropriations, has become more difficult. In 42 of the last 45 years, Congress has failed to agree on and pass appropriations bills by the start of the fiscal years. [1] In these instances, Congress is forced to pass short-term stopgap funding in the form of a Continuing Resolution (CR), or they put all 12 appropriations bills into one giant omnibus legislation to fund the full government or risk a government shutdown (which has happened several times). As might be clear at this point: neither of these processes for funding the government that have become the norm are considered “regular order” per the Congressional Budget Act. 

What does the President’s Budget Request really mean?

What does all of this have to do with the leaked memo? The memo represents what seems like a draft for the first step in the above chart where federal agencies create budget requests to submit to OMB. However, there is a lot of uncertainty surrounding this memo, including whether it is in fact the Department of State’s actual budget request for FY26. Subsequent reporting has noted that the memo is not expected to “pass muster with either the department’s leadership or Congress”. [2]

The president’s budget request in any given year is simply an overview of an Administration’s priorities and values. Congress can take it, take portions of it, or take none of it as they work through their own process to appropriate and authorize the federal agencies and programs. More often than not, Congress goes against the PBR during their appropriations process. It’s important to remember that the previous Trump Administration’s proposed budgets for ECA were cuts of anywhere from 55-75%. These were all rejected by Congress and funding for exchanges ended up growing by 17% over those four years. While a funding increase for ECA is not expected, it’s important to take heart that Congress has the final say on funding the federal government. 

Because the appropriations process is so broken (often ending in an omnibus or Continuing Resolution), and the legislative filibuster still exists, bipartisan agreement, at least in the Senate, is required to pass any kind of legislation to fund the government. Additionally, the House ultimately has to agree with whatever the Senate passes for it to go to the president to become law. 

All of that is to say, bipartisan support continues to exist for the Department of State, for ECA, and for international exchange programs writ large. Terminating ECA and eliminating all exchange programs is very unlikely to get the bipartisan support required to become law.

 ______________________________________________________

[1] Center for Budget Policy and Priorities, https://www.cbpp.org/research/federal-budget/introduction-to-the-federal-budget-process

[2] PBS news, https://www.pbs.org/newshour/politics/watch-live-state-department-briefing-may-address-proposed-budget-cuts-el-salvador-deportations

Exchanges Aren’t Going Anywhere: Leaked State Department Memo and What It Means for Exchanges

On Monday, April 14, The Washington Post broke the news that a leaked internal Administration memo proposed cutting the State Department by 48% and eliminating the Bureau of Educational and Cultural Affairs (ECA) and its exchange programs. 

While the memo is concerning and must be taken seriously, context is key: the memo is a proposal of a potential proposal and doesn’t mean the imminent elimination of ECA and exchange programs. 

This memo is a part of an annual process for creating the President’s Budget Request, or PBR. The memo is the State Department’s response to the Office of Management and Budget’s (OMB) request for input on funding levels as it creates the PBR for FY26. And ultimately, it’s Congress that determines final funding numbers. If you’re interested in learning more about this process, I highly encourage you to read Alliance Assistant Director and Head of Advocacy and Government Relations Adrienne Jacobs' excellent analysis here.  

Exchange programs aren’t going anywhere, not if we have anything to say about it. We at the Alliance, along with our members, supporters, and partners, are working tirelessly to promote and protect international exchange programs. For those interested in staying up to date on the latest policy news and advocacy opportunities, visit our 47th Presidential Administration webpage. 

Advocacy Update: Exchange Funding Begins to Flow After Pause

As of Friday, March 28, Alliance members have received over 85% of outstanding State Department payments that had been withheld due to the ongoing funding freeze. This is a major victory in an advocacy effort that began when on Thursday, February 13 when the State Department informed grantees that a temporary 15-day pause on federal funding for all current and future State Department FY25 grant disbursements had gone into effect as of Wednesday, February 12.

In response, the Alliance, along with NAFSA and The Forum on Education Abroad, launched an advocacy campaign urging Congress to restore funding to ECA program implementers. Exchange champions sent 25,000+ letters to more than 500 Congressional offices. 

Just days after the campaign launch, 160 Alliance members went to Capitol Hill to meet with over 140 Congressional offices on Advocacy Day, delivering the same urgent message.

These meetings led to a House sign on letter co-sponsored by Rep. Chellie Pingree (D-ME, 1) and Rep. Madeleine Dean (D-PA, 4) with 47 signatures urging Secretary of State Rubio to immediately stop the freeze.

We also generated strong media attention in major outlets like the New York Times, the Washington Post, and the Associated Press.  

Action Alert: Urge Congress to Restore Vital International Exchange Funding

The Alliance for International Exchange, on behalf of its more than 90 U.S.-based members who implement international exchange programs, and in conjunction with NAFSA and the Forum on Education Abroad, is launching a campaign to urge Members of Congress to demand that the U.S. Department of State lift the freeze on international exchange funding. 

The Department of State still has not lifted what was described as a 15-day temporary pause of all international exchange program funding that went into effect on Wednesday, February 12. This pause has paralyzed an array of time-honored exchange programs that enhance American safety, security, and prosperity.  

This action risks the health, safety, and future of the more than 12,500 American youth, students, and professionals who are currently abroad or who have plans to be abroad in the next six months. It also shuts off funding for U.S. programs now hosting more than 7,400 youth, students, and professionals in American communities from around the world. 

We encourage all exchange champions take action today and urge Congress to support thousands of American students and communities by contacting the U.S. Department of State to demand that funding be turned back on for international exchange programs. 

House Bill Introduced Supporting the Au Pair Program

On Thursday, September 19, 2024, legislation was introduced in the House of Representatives regarding the modernization of the federal Au Pair Program. Sponsored by Rep. Guy Reschenthaler (R, PA-14), the Modernizing the Au Pair Program Act. H.R. 9677 (the MAP Act) addresses important issues that the Alliance has worked with its members and Members of Congress on over the last several years. We applaud the introduction of the bill and are pleased to see Rep. Reschenthaler and other Members of Congress supporting the Au Pair program and engaging on these specific issues that are so important to its continued success.

The MAP Act reaffirms and clarifies the exclusive federal regulatory authority of the Department of State over the Au Pair Program. It also directs the Department to use that regulatory authority to issue a regulation that modernizes and strengthens the program in several key ways. The bill directs the Department to modify the au pair stipend in a uniform national way, while keeping the program affordable and flexible for American families. The bill also highlights the participation of military and first-responder families who have increasingly come to rely on and appreciate the value of the program. Lastly, the bill underscores the importance of au pair immersion in host family culture and life.

All of these topics were key parts of the Alliance’s previous comments on the Department of State’s Notice of Proposed Rulemaking (NPRM) earlier this year, and we’re pleased to see them so comprehensively addressed in this legislation. The Alliance looks forward to collaborating with our members and Congressional offices as this bill moves through the legislative process.