U.S. Department of Education (ED), Office of Management and Budget (OMB)

The following titles, parts, and sections of the Code of Federal Regulations (CFR) should be rescinded to restore flexibility and equity in federal education funding, ensuring that resources are directed effectively to serve the needs of underfunded communities: 34 CFR Part 75 – Direct Grant Programs Sections to Rescind: § 75.225 (Competitive Priorities): Rescind restrictions that impose competitive preferences based on non-educational priorities such as matching fund requirements. § 75.250 (Continuation of Projects): Remove language that unnecessarily limits continuation funding based on local financial burdens or matching criteria. § 75.260 (Budgeting and Fiscal Flexibility): Rescind excessive budgeting constraints and mandatory cost-share requirements for school districts serving low-income communities. 34 CFR Part 76 – State-Administered Programs Sections to Rescind: § 76.701 (State Use of Federal Funds): Remove fiscal match requirements for state-administered grants that disproportionately burden schools in underfunded areas. § 76.703 (Subgrants): Modify subgrant restrictions to eliminate requirements that force schools to meet stringent local cost-share or matching rules, thus limiting access to federal education dollars. 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Sections to Rescind: § 200.208 (Special Conditions): Remove financial special conditions that impose additional match requirements or caps on funding for schools in marginalized communities. § 200.303 (Internal Controls): Modify restrictions that limit the ability of local and state governments to freely allocate funds for high-need education programs without overly burdensome internal control and auditing requirements. § 200.329 (Monitoring and Reporting Program Performance): Remove restrictions on how federal funds are reported, allowing more flexibility to address local educational needs without fear of non-compliance based on local financial constraints. OMB Circular A-87 (Cost Principles for State, Local, and Indian Tribal Governments) Targeted Rescission: Rescind cost-sharing requirements that disproportionately burden local educational programs and clarify acceptable use of federal funds for educational services, ensuring that schools are not hindered by restrictive cost principles tied to underfunded programs.

Fiscal Constraints and Funding Eligibility Limits Under Federal Education Programs

Fiscal constraints like spending caps, match requirements, and restrictive cost principles stifle the ability of schools and educational programs to deliver high-quality services. These constraints have disproportionately harmed the most underserved students, including those in low-income, rural, and minority communities. Removing these limitations would increase access to federal funds, reduce bureaucratic barriers, and enhance educational equity.

U.S. Department of Education 400 Maryland Avenue, SW Washington, DC 20202

Federal Student Aid Information Center Phone: 1-800-4-FED-AID (1-800-433-3243) Email: studentaid@ed.gov

Over the past several decades, federal education funding has been constrained by spending caps, matching fund requirements, and overly rigid guidelines that limit the flexibility of states, districts, and schools in allocating resources. The No Child Left Behind Act and subsequent Every Student Succeeds Act (ESSA), while well-intentioned, have imposed accountability structures that are overly prescriptive, particularly with regard to low-income and minority-serving schools. In addition, fiscal constraints have made it difficult for local districts to adequately serve students with disabilities or English learners, exacerbating the achievement gap.

Rescinding these fiscal constraints will allow for greater flexibility and more equitable distribution of federal education funds. By reducing or removing funding caps and matching requirements, educational programs will have the financial resources they need to address local needs, support marginalized students, and implement innovative, tailored educational solutions. It will also restore local autonomy in prioritizing educational interventions without being bogged down by rigid fiscal reporting and matching rules. Ultimately, this will lead to improved educational outcomes and reduced inequities.

Federal education funding programs will no longer be subject to fiscal caps or excessively burdensome matching fund requirements. The revised text will allow for more flexible use of federal funds in educational programs, streamline financial reporting, and remove unnecessary administrative costs that disproportionately burden small or under-resourced districts. These reforms will align federal funding with the needs of students, districts, and local communities, empowering them to direct resources where they are most needed.

Linda E McMahon

Secretary of Education