What’s in the Proposed 2026-2027 Federal Budget for Kids with Disabilities? Here’s What Families Should Know

The assault on Olmstead

The disability community expressed united outrage at the announcement of a Department of Justice (DOJ) memo on June 18, 2026, which concluded that the interpretation of the famous Olmstead decision — the longstanding rule requiring states to serve people with disabilities in the most integrated setting appropriate to their needs — is incorrect, and instructs government agencies such as Health and Human Services (HHS) and the Department of Justice (DOJ) stop enforcing it.

This ties into a number of other moves in the administration to limit Home and Community Based Services and is consistent with the federal approach. This doesn’t mean that states have to stop providing services, but it does mean that if a state chooses instead to require people with disabilities to be institutionalized in order to receive Medicaid-funded services, the federal government would not consider this discrimination and would not act to prevent it.

Note that California defended their use of HCBS Medicaid funding for IHSS payments to families taking care of their loved ones — by referring to the federal enforcement of this rule over 30 years.

The DOJ opinion is just an opinion; it does not change the law. Government agencies are expected to follow the guidance, which could affect how they enforce protections under the Olmstead decision. If an agency acts on that guidance in a way that results in discrimination, an affected person can challenge those actions in court, allowing the courts to decide whether they are consistent with the law.

Why Olmstead matters for families

The Olmstead case was decided by the Supreme Court in 1999. Two women in Georgia — both with intellectual disabilities, one also diagnosed with schizophrenia, the other with a personality disorder — were confined in a state psychiatric institution. Their own doctors had decided the women were ready to move to community-based care, but the state kept them institutionalized anyway. The women went to court, arguing this violated the Americans with Disabilities Act (ADA), which was signed by President George Bush on July 26, 1990.

The case posed the question of whether keeping someone in an institution, when their own doctors recommended community care, counts as illegal disability discrimination. The court held that "unjustified institutional isolation of persons with disabilities is a form of discrimination" and is therefore prohibited under the ADA. In other words, keeping someone locked in an institution without good reason, when they could be served in the community, is a civil rights violation.

What Olmstead established — and why it’s now being challenged

Justice Ruth Bader Ginsburg wrote the Olmstead opinion in 1999 for four of the justices. She laid out a three-part test for when states must move someone to community care:

1. Their own treatment team says it's appropriate.
2. The person doesn't object.
3. The state can reasonably afford it given its resources and other patients' needs.

Ginsberg’s opinion had a majority, but the court was very divided. Justice Stevens and Justice Kennedy agreed that it was discrimination but disagreed with Ginsburg’s three-point test. Justices Thomas, Scalia, and Chief Justice Rehnquist dissented, arguing that treating people differently isn't "discrimination" in the legal sense unless you're comparing them to a similarly situated group being treated better.

Only five justices actually agreed on the narrow point that unjustified isolation can be discrimination — but they didn't agree on when it's unjustified or what triggers a state's obligation to act. For 25 years, federal regulators and most courts have treated Olmstead as a broad mandate requiring states to maximize community-based, integrated care for people with disabilities. This latest DOJ opinion argues that interpretation is an overreading — that this law doesn’t actually require the government to ensure the "most integrated setting appropriate to their needs.”

Disability rights organizations nationwide have reacted with alarm, framing the opinion as an attempt to unravel four decades of hard-won deinstitutionalization — work that closed almost all state institutions and shifted care into communities not only because it is more humane but also, contrary to any cost-saving rationale, because home and community care is generally cheaper than institutional care. Read more in our article Paid Family Caregiving Through Medicaid HCBS Waivers.

The decision will likely be challenged in court, and it remains to see how today’s Supreme Court justices will interpret the ADA.

The end of the Department of Education?

On June 16, 2026, the US Department of Education announced the long-anticipated move of OSERS to the Department of Health and Human Services (HHS) and the OCR to the Department of Justice. In a letter posted on the ED’s website, Secretary of Education Linda McMahon described the move as a partnership with the other agencies.

Following the outcry from families and educators, many politicians have promised to fight the dismantling of the federal Department of Education, including impeaching the Secretary of Education for acting without Congress. Several organizations have challenged the move’s legality.

The federal response — and why advocates and orgs are pushing back

McMahon sought to reassure families, writing that “IDEA predates the Department of Education and will continue to exist long after" and that “No partnership can alter OSERS’ or OCR’s legal responsibilities, or the rights individuals are afforded under federal law." She also said, “IDEA, as an education law, ensures that a child’s disability isn’t viewed as a medical condition that needs to be treated.”

Many advocates like Denise Marshall from COPAA have long argued that placing OSERS in HHS reflects a medical model in which disability is a disease to be cured.

Robyn Linscott, Director of Education and Family Policy at The Arc of the United States, said, “Moving IDEA oversight into HHS pushes students with disabilities toward a medical model, where disability is treated as a diagnosis to manage instead of a natural part of human life. When that mindset drives education decisions, students are more likely to be segregated, underestimated, or treated as separate from the school community. IDEA belongs in an education agency because it is about classrooms, IEP meetings, behavior support, accessibility, and whether students can learn alongside their peers.”

Katy Neas, CEO of The Arc of the United States and former Acting Assistant Secretary in the Office of Special Education and Rehabilitative Services at the U.S. Department of Education, responded, “Students with disabilities don’t experience school in agency silos. A student who is denied services, disciplined for disability-related needs, or blocked from an accessible classroom needs one federal education system that can see the whole picture and act. Moving special education to HHS and civil rights enforcement to the DOJ would split apart the offices responsible for making disability rights real in schools, leaving families chasing answers across the federal government instead of getting accountability from one education agency.”

Many organizations pointed to the move as treating special education as a treatment for ill health. Others noted that separating the remaining education policy (which has already moved to the Department of Labor) and special education prevents the necessary coordination between the two.

Since October 2025, a broad coalition of education and disability organizations have opposed the move, including National Center for Learning Disabilities, National DeafBlind Coalition, National Disability Rights Network (NDRN), National Down Syndrome Congress, National Down Syndrome Society, National Education Association, National Federation of the Blind, American Association on Intellectual and Developmental Disabilities, American Civil Liberties Union (ACLU), Angelman Syndrome Foundation, NAACP, National Association of Councils on Developmental Disabilities, Association of School Business Officials International (ASBO), Association of University Centers on Disabilities, Autism Society of America, Autism Speaks, Autistic Self Advocacy Network, Bazelon Center for Mental Health Law, Council for Exceptional Children, Council of Parent Attorneys and Advocates (COPAA), Disability Rights Education and Defense Fund, and many more.

On June 9, 2026, the House Appropriations Committee in Congress voted to approve a spending bill that allows $71 billion for the US Department of Education (ED), effectively a 10% cut, even more drastic than President Trump's proposal. Most of the $4.6 billion cut to K-12 education funding comes from Title 1 funding, the elimination of the Office of English Language Acquisition, and other programs such as the Institute for Education Sciences, which funds federal education research, cut by almost $300 million, and eliminating Title II, teacher preparation and professional development, and also adult education.

For special education programs under the Individuals with Disabilities Education Act (IDEA), there is an increase of $46 million. In total, the bill allocates $15.5 billion in federal IDEA funding — still far from full funding at 40% APPE. There is also $1.5 billion for career and technical education state grants, an increase of $10 million, and $40 million for the Innovative Approaches to Literacy program, a $10 million increase.

Notably, the committee's bill still structures IDEA funding the traditional way: one lump-sum appropriation of $15.5 billion "for carrying out the Individuals with Disabilities Education Act." The provisos keep the separate statutory authorities alive rather than collapsing them as the White House budget had proposed. For example, the bill references "the State Personnel Development Grants program under Part D, subpart 1 of IDEA" as something the Secretary may use funds for to evaluate performance, which only makes sense if that program still exists with its own funding stream. It also references states using funds reserved "under sections 611(e)(2) and 619(f) of the IDEA" for subgrants, meaning Section 619 (Preschool Grants) state-level set-asides are treated as continuing, not eliminated. There's also no language anywhere in the bill moving IDEA out of the Department of Education's Office of Special Education and Rehabilitative Services into HHS (although this was announced on June 16 as a “partnership” between the two agencies; see update above).

Office of Civil Rights

The bill proposes an increase of $50 million over Trump’s proposed budget for the Education Department’s Office for Civil Rights, bringing it to $140 million. (The June 16 announcement indicates that this will now be spent in partnership with the Department of Justice.) A January GAO report indicated that chaos and inadequate resources left the current OCR ineffective in defending civil rights in education. In April 2026, Senator Bernie Sanders, Ranking Member on the Senate Committee on Health, Education, Labor, and Pensions (HELP), released a report that found that the OCR under this administration has been the least productive in 12 years.

The report looked at the data on resolution agreements resulting from discrimination complaints from students and families. These are legally binding commitments between OCR and schools to remedy violations of students’ civil rights, monitored for years after a complaint is filed. The report finds that the administration reached 78% fewer resolution agreements overall compared to the previous year, the lowest rate in 12 years. Students with disabilities, which make up the largest share of cases, resulted in nearly 79% fewer disability resolution agreements.

“A resolution agreement means OCR identified a problem and required a school to fix it — not just for the student who came forward, but for every student who comes after them.” The report showed that “despite receiving the same budget as the prior year and facing nearly 12,000 pending civil rights cases, Education Secretary Linda McMahon’s OCR provided relief to students and families through resolution agreements in just 1% of pending cases.”

Senator Sanders said, “When a child with a disability is denied the education they are entitled to, when a student faces racial or sexual harassment — they turn to the Office for Civil Rights for help.” Since the ED has been gutted, Senator Sanders said that "as a result, tens of thousands of students facing discrimination have been left with no recourse. That is beyond unacceptable.”

Head Start

Head Start provides early childhood education for low-income families but also allows for some children to receive early intervention within inclusive settings for children under IDEA Part C and B (ages 3-5). Head Start is safe with an increase of $10 million to $12.3 billion. In a letter to the HELP Committee, a coalition of over 90 major early education advocacy organizations from 35 states asked for at least an additional $1.91 billion for Head Start (totaling $14.27 billion).

Since only 27% of eligible children are currently served (11% for Early Head Start), which they attributed to the erosion of funding levels, there is a great need for further expansion. First Five Years Fund wrote in the letter, “This investment is critical to ensure Head Start and Early Head Start are able to meet the needs of children, families, and communities, specifically to sustain and expand access for eligible children and families; recruit and retain the qualified teachers and staff needed to support children and their development; allow programs to address pressing local needs, including long-overdue repair, maintenance, and renovation of facilities; and award competitive grants for expansion of Early Head Start.”

What happens next

The House will vote on the whole bill, and the Senate will get their turn. The full budget package must be complete by October 2026.

The White House has released their budget proposal for fiscal year 2027 (which starts in October 2026 and runs through September 2027). The FY 2027 U.S. federal budget proposal was submitted by President Donald Trump through the Office of Management and Budget (OMB). The budget reflects the administration's priorities and fiscal policies for the upcoming fiscal year.

There are some important considerations in the proposal that would negatively impact families with children with disabilities if it came to be enacted. It is important to note that many of these proposals were also in last year’s White House budget and were rejected by Congress.

We looked at the details of the proposal to find the highlights. We want families to understand it so that they can contact their federal representatives and remind them, yet again, that special education, advocacy, and civil rights protections for individuals with disabilities are essential to our children and the adults they will become.

How to contact your representative:

• COPAA has Calls for Action that enable you to contact your representatives easily.
• PTA Voter Voice lists top priorities and actions.
• The National Down Syndrome Congress has a Call to Action.
• You can also write a letter to your representative or senator or visit them in their constituency office. Find your representative here.

You may have heard that the proposed package contains an increase in IDEA funding, and indeed it does contain a small increase. But let’s dive down into how federal IDEA funding works and why this proposal is actually bad news for students with disabilities.

Call for full funding of IDEA

IDEA just celebrated its 50th anniversary — but over 50 years, special education has changed drastically. IDEA is in reality a series of laws, including the Education for All Handicapped Children Act (EHA) in 1975, the Individuals with Disabilities Education Act (IDEA) in 1990, and the Individuals with Disabilities Education Improvement Act in 2004.

Fifty years ago when Congress passed the EHA, the bill did not include any appropriations; it authorizes the government to spend money, but it requires a funding bill or appropriation to determine how much money. The EHA almost didn't pass because of disagreement over how much government funding the states could expect. The compromise agreed was that the formula would provide a maximum grant for each state that was equal to its count of children with disabilities served, multiplied by a gradually increasing percentage of the national average per pupil expenditure (APPE) — beginning at 5% of the APPE in FY 1978, increasing to 40% in FY 1982, and then remaining at 40% every year thereafter. However, this 40% is a cap rather than a requirement, and funding needs to be appropriated by Congress every year. In reality, Congress has never come close to the 40% cap. The highest amount funded was in FY 2006, which was almost 19% of APPE.

Historical Comparison of the Percentage of APPE Funded through Appropriations for IDEA and the IDEA Full-Funding Level (40% of APPE), FY 1981 to FY 2025:

Source: Congressional Research Service

Many education advocacy groups and disability organizations are campaigning for full funding of IDEA. This does not mean that the federal government would fund all the cost of special education; it only means it would fill the 40% cap. In 2020, the National Education Alliance estimated how much each state would gain from having full funding. For example, California received $1,327.8 million in 2020 but would receive $3,301.1 million under 40% full funding. Pennsylvania received $462.9 in 2020 but would receive $1,440.2 million, and Maryland received $217.4 million in 2020 but would receive $568.1 million with full funding.

In 2025, APPE was $17,250. The formula allocation was around 10.2%, leaving a shortfall of a possible $38.66 billion that Congress could allocate to be divided up among the states. There is a bill in Congress, the IDEA Full Funding Act, that many organizations are supporting for Congress to increase the allocation each year until reaching full funding in 2035.

IDEA state grant formula

In 1975, the formula used to divide Congress’s appropriation up between the states was simple: take whatever percentage of APPE we were planning to fund and multiply it by the number of children with IEPs in a state.

In the 2004 reauthorization of IDEA, Congress changed the original formula because of concerns that the funding may create an incentive to identify students with disabilities and result in a disproportionate percentage of students of color being “labeled” with a disability. From FY 2007 onwards, the funding that each state gets in their grant is calculated by a formula that takes an amount (less than 40% of APPE) multiplied by the number of children with disabilities the state served in the 2004-2005 school year and then adjusted by the annual rates of change in the state's population for children in the age range for special education (85% of the adjustment) and in the state's population of children living in poverty in the same age range (15% of the adjustment).

This formula effectively penalizes states that historically had low identification rates and have since improved their Child Find processes. There is also a concern if a state is losing population to other states disproportionately when it comes to children with disabilities (possibly to states that offer better services to children with disabilities, like California). In both these cases, the proportion of children with disabilities is increasing faster than their general child population, which may be declining. By the way, moving away from the original funding model has not slowed the increase in identification.

Another complication is if the state changes the age for which it offers IDEA. For example, in this Congressional Report, California is listed as offering FAPE from age 3 to 18 when it in fact offers FAPE until age 22. The result is that IDEA funding across the states is both arbitrary and disappointing.

Federal funding is not the biggest problem for special education

In 2025, California received $1.5 billion in its state grant, but California schools spent over $12 billion on special education, so even if quadrupled, the full funding of IDEA would not fund all of special education. The remaining funds come from state and local funding. Typically, local and state funds provide most of the support for IDEA, with roughly 10-15% coming from federal sources.

To understand why the White House proposal is problematic, we need to look at the different allocations of funds within IDEA.

IDEA is broken up into four main funding streams:

• There are three grants to states; these grants are given to states to be used to provide special education on the condition that they follow IDEA.
  • Part B funds for school age 5-22
  • Part B funds for preschool age 3-5
  • Part C funds for infants and toddlers age 0-3
• Part D funds are allocated nationally.

At first, the new budget looks as though there is no money for preschool age 3-5, but the proposal simply consolidates the grants.

Program and financing (in millions of dollars):

New 2026-27 proposal:

• The budget provides nearly $16 billion for IDEA serving over eight million children with disabilities.
• This includes a $489 million increase for IDEA State Grants and a $50 million increase for IDEA Grants for Infants and Families. (Remember there is a shortfall of $13 billion.)

Despite the increases proposed, it is of great concern to the disability community that the White House again proposes to combine the six different grants into one. Many administrators worry that if states are responsible for allocating funds between Parts A, B, and C, there may not be enough spent on early intervention. As we have seen, typically administrators in local school districts are forced to use local funds for 60-70% of IDEA funding because they are obligated to provide FAPE whether they have the money or not.

National Grants (Part D) provide accountability and technical support

The White House wants to hand over national IDEA programs to the states, but there are reasons why this won’t work. Providing technical support at a regional level is more efficient for low-incidence disabilities. By cutting national Deaf programs, states will struggle to provide technical support for Deaf children in schools. National technical assistance grants have funded organizations such as TIES Center and SWIFTSchools that provide technical assistance on inclusion in education.

Parent Information Centers provide support to individuals with disabilities and their families that help keep the state department of education accountable for providing IDEA. It doesn't make a lot of sense to ask those same institutions to apply for funding from the state that they are monitoring.

The new proposal includes funds previously allocated by the US Department of Education to organizations now rolled into the state grants without specific requirements that they need to be spent on those programs.

Program and financing (in millions of dollars):

Other education funding

The Office of Civil Rights in the Department of Education, now depleted, still gets an allocation to investigate civil rights claims in education.

Office for Civil Rights, program and financing (in millions of dollars):

There are also funds from the Department of Education that are not under IDEA but fund vital services for young people with disabilities in each state (such as the Department of Rehabilitation in California). While career and technical education is proposed to move to the Department of Labor, Vocational Rehab is still included under the Department of Education.

Vocational Rehabilitation program and financing (in millions of dollars):

Over in the Department of Health and Human Services, the Administration for Community Living is proposed for elimination with no funding. Some of its programs are moved elsewhere, notably the new agency called Administration for Children, Families, and Communities (ACFC). Key programs that are now under the ACFC are Developmental Disabilities programs that include the 56 State Councils on Developmental Disabilities (SCDD) and 56 Developmental Disabilities Protection and Advocacy formula grants.

• SCDDs are led by people with intellectual and developmental disabilities I/DD, family members, and other stakeholders. They focus on advancing policies and practices that improve opportunities for people with I/DD to live and participate fully in their communities, particularly with access to education, employment, and healthcare. Councils seek to empower self-advocates and families, support policy development, fostering cross-sector partnerships, and educate decisionmakers using research and lived experience.

• Protection and Advocacy grantees provide legal advocacy services to protect the health, safety, and rights of people with I/DD, including legal representation and assistance in community and institutional settings. P&A organizations like Disability Rights California pursue systemic reforms that improve access and inclusion while also providing individualized, person-driven advocacy.

The HHS requested $125 million for Developmental Disabilities programs in FY 2027, a decrease of $66.4 million from the FY 2026 level. It is encouraging that SCDD and Protection and Advocacy formula grants that fund state-level organizations will maintain similar levels of funding to FY 2026.

Where the cut comes in is that the administration does not propose funding for Developmental Disabilities Projects of National Significance, University Centers for Excellence in Developmental Disabilities (UCEDD), and Voting Access for Individuals with Disabilities. The budget provides additional funding to the Independent Living program so that states have the flexibility to continue providing the services supported by these programs, if they so choose.

UCEDDs, such as The Mind Institute at UC Davis, provide technical expertise and thought leadership in the disability community. Many UCEDDs also run Leadership Education in Neurodevelopmental and Related Disabilities (LEND) programs to train professionals, ensure access to screening and diagnosis, and offer information for parents supporting individuals with autism and developmental disabilities. LEND is funded by the Maternal & Child Health grant, which is housed in the Administration for a Healthy America agency — maintaining previous year’s levels at $38.2 million.

If you have been served by your local UCEDD or participated in a LEND program, this would be a great time to tell your representatives how wonderful they are.

1. Submission to Congress: The president's budget proposal is submitted to Congress, where it serves as a starting point for the federal budget process.

2. Congressional Review and Amendments: The House and Senate Budget Committees review the proposal and draft their own budget resolutions. These resolutions set the overall spending and revenue levels but do not allocate funds to specific programs.

3. Appropriations Process: The House and Senate Appropriations Committees divide the total spending into 12 appropriations bills, each covering a specific area of government (e.g., defense, education). These bills are debated, amended, and voted on by both chambers of Congress.

4. Reconciliation and Final Approval: Differences between the House and Senate versions of the budget are reconciled in a conference committee. The final budget is sent to the president for approval or veto.

Key dates in the budget process:

• April 2026: The president submitted the FY 2027 budget proposal.
• Spring 2026: Congressional Budget Committees begin reviewing the proposal and drafting budget resolutions.
• Summer 2026: Appropriations Committees work on the 12 appropriations bills.
• September 30, 2026: Deadline for Congress to pass the budget to avoid a government shutdown.
• October 1, 2026: Start of FY 2027.

These steps and timelines ensure that the budget undergoes thorough review and debate before being finalized.

Remember that this is just a proposal — the White House cannot enact these changes without Congress, so talk to your representatives and tell your story!

Sources:

• Budget of the U.S. Government FY 2027
• Appendix - Budget of the U.S. Government FY 2027
• HHS Budget in Brief
• U.S. Department of Education Fiscal Year 2027 Budget Summary