Federal Funding Updates

Every year, Congress races to finish the majority of its work before the August work period, when most members head back to their districts. The district work period is even more relevant in 2026 with the midterm elections quickly approaching. Following Congress’ return to Washington, D.C. during the first week of June, both chambers are scheduled to be in session through June and July, with both also scheduled to be out of session for the entirety of August, half of September and the month of October (leading into the November elections). So, with just the next seven weeks of session and two weeks in September, what does Congress need to act on?

• FY2027 Government Funding: As I’ve referenced in recent editions, Congress is moving ahead with the annual appropriations process, although the House is much further along than its Senate counterpart. While the House Committee on Appropriations has introduced and advanced several spending bills out of committee, that has translated to only one bill – Military Construction & Veterans Affairs (the least controversial of the 12 bills) – passing the House. In recent days, the House Appropriations Committee introduced and marked-up both the Homeland Security and Labor-Health and Human Services-Education funding bills, two of the more contentious bills to be considered every year. However, introducing and advancing these bills through committee is just the first step – there’s no guarantee that these bills have the necessary votes to pass on the House floor. In a sign of just how difficult the annual funding process could be this year, the Senate Appropriations Committee – almost always the “adults in the room” when it comes to government funding disputes – was forced to postpone its first wave of mark-ups twice in a matter of days, as Chair Susan Collins (R-ME) and Ranking Member Patty Murray (D-WA) remain billions of dollars apart on top-line spending levels.
• National Defense Authorization Act (NDAA): The House Armed Services Committee introduced the FY27 NDAA at the end of May and the committee marked it up during the first week of June. The NDAA remains one of the few remaining bipartisan bills that Congress passes every year and both chambers will look to find floor time to continue a more than six-decade streak of the annual defense policy bill being signed into law.

Last month, I provided a summary of President Trump’s FY27 Budget Request, which proposed substantial cuts – although not as drastic as the previous fiscal year’s request – to the federal government’s research enterprise. Last year, House Republican appropriators introduced funding bills that largely mirrored the president’s request, leading many in Washington, D.C. to believe the same would happen this year. In a bit of a twist, the same Appropriations Committee leaders are introducing spending bills that are more favorable to research agencies and programs, although they still propose cuts to some agencies.

While the House Appropriations Committee has only advanced the least controversial spending bills out of committee to date, we did get a glimpse of the first research-heavy subcommittee spending bill with the introduction of the FY27 Commerce-Justice-Science (CJS) bill before the House left for a weeklong recess. The legislation proposes a 5% reduction to NOAA funding, level funding for NASA, and a roughly 20% cut to the National Science Foundation. While these cuts still target several critical agencies and programs that support research across our university, the cuts are more limited than those in President Trump’s budget request. It is also worth noting that the CJS bill includes language extending the block on changes to indirect cost rates, even though President Trump’s budget once again seeks to set indirect cost rate caps at an across-the-board 15%. The committee will consider the CJS bill in a mark-up later in May, and we expect several of the other research-heavy spending bills to be introduced later this month and into June. We expect to see the Senate propose its own spending bills this summer – setting up negotiations between the two chambers of Congress.

On April 3, President Trump released the FY27 President’s Budget Request (PBR), and similar to last year, it aims to reduce federal government spending, especially non-defense discretionary spending. While some of the proposed cuts and zeroed out accounts may be alarming, it’s worth remembering that we’ve seen this before.

Before diving into the budget request, I thought it would be helpful to compare this budget request to what we saw with FY26 funding requests and allocations. As a reminder, President Trump’s FY26 budget request included a staggering 23% reduction – or $163 billion – to non-defense discretionary funding and sought an increase for the Department of Defense. While the House Committee on Appropriations passed spending bills that included some of the proposed cuts, the Senate Committee on Appropriations opted for a more traditional, bipartisan approach that included a combination of slight increases, level funding and cuts to programs across the federal government. Ultimately, and after the longest federal government shutdown in history, Congress approved 11 of 12 spending bills in bipartisan votes that re-opened the government and overwhelmingly rejected the president’s proposed cuts.

According to the FY27 budget request, President Trump is requesting that Congress cut nondefense discretionary spending by 10% from FY26 levels while increasing defense spending by 44%. We expect to see more detailed plans from departments and agencies in the coming weeks.

• The budget requests $111.1 billion in discretionary budget authority for the Department of Health and Human Services for 2027, a $15.8 billion or 12.5% decrease from the 2026 enacted level.
• The budget requests $4 billion in discretionary funding for the National Science Foundation for 2027, a $4.8 billion or 55% decrease from the 2026 enacted level.
• The budget requests $53.9 billion in discretionary budget authority for the Department of Energy, a $4.8 billion or nearly 10% increase from the 2026 enacted level.
• The budget requests $18.8 billion in discretionary budget authority for the National Aeronautics and Space Administration for 2027, a $5.6 billion or 23% decrease from the 2026 enacted level.
• The budget requests $1.5 trillion in total budgetary resources for 2027 for the Department of Defense, a $441 billion or 44% increase from the 2026 enacted level.
• The budget requests $76.5 billion in discretionary budget authority for the Department of Education for 2027, a $2.3 billion or 2.9% decrease from the 2026 enacted level.

Normally, the PBR is transmitted to Congress the first week of February, allowing the House and Senate Appropriations Committees to review the request, hold budget hearings with cabinet secretaries and draft spending bills in time for mark-ups in April and May.

While the FY27 PBR is almost two months later than “normal”, Congress – especially the House – is moving full speed ahead with drafting funding bills; in fact, we may see the first few bills introduced in the next few weeks. This means that, barring significant coordination with the White House Office of Management and Budget behind closed doors, the House will likely be introducing funding bills that mirror those introduced in FY26 that include substantial cuts to non-defense discretionary spending. The Senate is not moving at the same pace as the House, but we expect them to introduce spending bills later in April and into May.

The next few weeks will include constant visits from President Trump’s cabinet to both chambers as they defend their departments’ respective budgets. Between budget hearings, we will also see subcommittee and full committee mark-ups as both chambers race to complete their work in time for floor action before the August recess. As always, I will be tracking any noteworthy comments made during these hearings and you’ll see updates from my office as Congress sets funding levels for FY27.

Generally speaking, the month of February provides two major opportunities for the president to lay out plans and priorities for the calendar year: the release of the fiscal year president’s budget request (PBR) and the State of the Union address. This year, however, President Donald Trump has opted for a different approach. As of publication, President Trump has not released his FY2027 PBR, despite it being due to Congress the first week of February, and reports indicate it may not be shared until the end of March. During his recent State of the Union Address, President Trump notably did not offer much guidance to Congress in terms of legislative action he wants to see taken this year.

Previous presidents have used the State of the Union to push for major policy and funding priorities, but President Trump chose not to do so. While the Department of Energy is spearheading one of the administration’s largest policy initiatives – the Genesis Mission – the president did not use his address to highlight its significance. Similarly, without a budget request for the upcoming fiscal year, Congress is now tasked with beginning its work for the FY2027 funding cycle without the administration’s requested funding levels, something that makes its job more difficult.

It’s also worth noting that the Department of Homeland Security remains shuttered due to ongoing negotiations between the White House and Senate Democrats. Additionally, President Trump’s decision to launch strikes on Iran will also take up significant time and effort for Congress, preventing a more proactive approach to legislating in 2026.

After a lengthy delay, Congress finished the vast majority of its work to fund the federal government for FY2026, although there are still ongoing negotiations to fund the Department of Homeland Security. While those discussions conclude, I thought it would be helpful to look back at the overall funding cycle to see what we can learn from the last year.

Almost one year ago, President Donald Trump released a budget request that included significant cuts to the federal research enterprise, a reorganization of the National Institutes of Health and the elimination of programs and offices across the federal government. The President’s Budget Request (PBR) is just that – a request that the administration makes to Congress to advance its priorities. While the House introduced funding bills largely in line with the PBR, the Senate took a different approach. Sen. Susan Collins (R-ME) worked closely with Sen. Patty Murray (D-WA) to introduce bipartisan bills recognizing that the proposed funding cuts would never pass the Senate. Ultimately, as Congress worked to fund the remaining federal agencies operating on a continuing resolution in January, the final bills mirrored those introduced by the Senate. While there are still cuts to agencies across the federal government, they are not nearly as steep as those proposed by President Trump in 2025. Below, I have included a few graphs to show trends in federal funding for a few key research agencies over the last decade to give a better picture of how this year’s funding levels relate to previous years.

With funding (almost) wrapped up for FY2026, Congress will almost immediately begin its work on funding for FY2027, although the President’s Budget Request may not be released until later in March, several weeks after it’s technically due to Congress. We expect a similar process to play out – a PBR that proposes significant cuts, reorganizations and eliminations of programs across the federal government and more. But once again, it will be up to Congress to decide how the federal government is ultimately funded.

**FY2023 included additional NSF funding from the CHIPS and Science Act.

A glaring issue will dominate the first month of the year for Congress and President Donald Trump: completing work on FY26 funding. While there is no “ordinary” year in Congress, an unfortunate trend continues as the federal government is still not fully funded for FY26, even though the fiscal year began Oct. 1, 2025. As a reminder, Congress approved three full-year spending bills as part of a package that reopened the government following the record-breaking federal government shutdown. However, a significant portion of the federal government (the agencies funded by the remaining nine funding bills) is operating under a continuing resolution through Jan. 30. The outstanding agencies and departments include the vast majority of the federal government’s research enterprise, including the Departments of Commerce, Defense, Energy and Health and Human Services, the National Science Foundation (NSF) and NASA.

Earlier in January, House and Senate appropriations leaders announced an agreed-upon bipartisan “minibus” package that would include full-year funding for the Departments of Commerce, Energy, Interior, and Justice, as well as the Environmental Protection Agency, NSF and NASA. The House overwhelmingly approved the funding bills, sending them to the Senate for consideration. The fate of the minibus in the Senate is less certain, as Colorado’s senators have blocked floor action to protest the Trump Administration’s decision to close the National Center for Atmospheric Research. It also appears that Congress likely has the votes to approve the two largest (and most contentious) funding bills: Defense and Labor-Health and Human Services-Education. This could allow for another minibus to move, which would decrease the chances of Congress needing another robust continuing resolution.

Over the past year, the U-M Office of Federal Relations and others advocating across the higher education and research space have engaged congressional offices to discuss the impact of the
efforts to impose 15% caps on indirect costs. U-M has supported the alternative “FAIR model” for F&A, developed by a group of subject matter experts as well as the Joint Associations Group (JAG). While there was an unsuccessful attempt to include legislative language codifying the FAIR model in FY26 spending bills, thanks to sustained advocacy by U-M and other higher education and research institutions, Congress included “blocking language” in the three-bill minibus. This language directs the Departments of Commerce and Energy, NASA and the NSF to apply the negotiated indirect cost rates as they were applied in FY24 and prohibits appropriated funds from being used to “develop, modify, or implement changes” to the FY24 negotiated rates. I anticipate that similar “blocking language” will be included in a conferenced Defense and Labor-Health and Human Services-Education package, which would prevent any changes to agency indirect cost rates at the NIH, Defense and more. The JAG’s focus will then turn to securing language in the FY27 spending bills to implement the FAIR model.

The Office of the Vice President for Research and the Office of the Vice President for Government Relations developed a webpage that goes into more detail about the appropriations process, budget reconciliation and passbacks. If you have any questions, please contact the Office of Federal Relations at [email protected].

Before addressing how prolonged funding negotiations can impact the current and next fiscal year, here is a brief update on where things stand in Washington, D.C.:

• Over the weekend, a handful of Senate Democrats joined with Senate Republicans to advance a legislative vehicle to re-open the federal government as the shutdown approaches 50 days. More details on the legislative package are below:
  • The Department of Agriculture, U.S. Food and Drug Administration, Department of Veterans Affairs, military construction projects and operations of Congress will be funded under full-year spending bills;
  • An updated continuing resolution will fund all remaining government agencies through Jan. 30; and
  • In return for voting to re-open the government, the Trump administration has committed to re-hiring employees fired during the shutdown, and Senate Majority Leader John Thune (R-SD) has promised to hold a floor vote in December on expiring Affordable Care Act tax credits.
• While the procedural motion received the required 60 votes to break a filibuster, there is no guarantee that final passage will be quick.
• The House, meanwhile, is expected to return to Washington, D.C., this week for the first time in more than 50 days to vote as soon as the legislative package passes the Senate. However, there is no guarantee that passage will be easy in the House, either. House Democratic leaders have come out in opposition to the package, and Speaker Mike Johnson (R-LA) will have to keep his caucus unified if only a few House Democrats ultimately support the bill.

So, what does this mean for FY2027? In an “ordinary” year, the White House submits the president’s budget request to Congress in February, which essentially kicks off the fiscal year’s appropriations process. Congressional appropriators hold hearings with the president’s cabinet and senior leaders to determine how they want to structure the fiscal year’s 12 spending bills with “top-line spending” numbers. However, with the possibility of another short-term CR – or even a full-year CR – the funding battle over FY26 could very likely drag into the FY27 cycle, forcing appropriators to delay their work.

This is important for stakeholders like the University of Michigan because during the early portion of the appropriations process, our Federal Relations team (oftentimes, with U-M faculty supported by federal funding) visits congressional offices to highlight programs of importance to our research enterprise. Any delay in the appropriations process reduces the amount of time the congressional offices we have engaged with have to submit their funding priorities on our behalf. In response, my office has started to prepare for this eventuality by updating our funding requests and preparing materials to share with congressional offices as soon as the opportunity arises.

As always, thank you to those that reach out to our office to share programmatic funding requests that are important to your research – we also collect this information from associations or coalitions of which U-M is a member. We will continue to work with advocacy associations and our counterparts at other universities to support funding for federal research. Please do not hesitate to reach out to our office if you want to highlight a programmatic request – [email protected].

The Office of the Vice President for Research and the Office of the Vice President for Government Relations developed a webpage that goes into more detail about the appropriations process, budget reconciliation and passbacks. If you have any questions, please contact the Office of Federal Relations at [email protected].

The federal government is shut down as Congress remains unable to find a legislative solution to fund the government that can reach 60 votes in the Senate. It is worth noting that only the Senate was in session during the days leading up to, and after, Oct. 1 as House Speaker Mike Johnson (R-LA) elected to keep the House out of session, stating that having passed a clean Continuing Resolution (CR) the House had “nothing to negotiate”. While President Trump and the “four corners” – Senate Majority Leader John Thune (R-SD), Senate Minority Leader Chuck Schumer (D-NY), Speaker Johnson and House Minority Leader Hakeem Jeffries (D-NY) – met earlier in the week, no progress was made and another meeting is not anticipated in the coming days.

Leading up to Oct. 1, Senators voted repeatedly on two stop-gap funding measures: the House-passed “clean” seven-week CR and the Democrats’ preferred plan, which would fund the government through the end of October and includes an extension of Affordable Care Act (ACA) premium tax credits and a repeal of Medicaid cuts enacted earlier this year. Neither spending measure received the required 60 votes to pass, although as the week progressed, a few Democratic Senators crossed the aisle to vote for the Republican-led stopgap spending bill, including Senators John Fetterman (D-PA), Angus King (I-ME) and Catherine Cortez-Masto (D-NV). The Senate voted on the same two continuing resolutions on Wednesday and Friday after the government officially shut down, and the chamber will return to Washington, D.C. the week of Oct. 6 after adjourning for the weekend. 

In an effort to unlock an agreement, President Trump has indicated that he would inflict political pain on programs and workers that Democrats prioritize as a result of the shutdown. On Truth Social, he stated: “I have a meeting today with Russ Vought, he of PROJECT 2025 Fame, to determine which of the many Democrat Agencies, most of which are a political SCAM, he recommends to be cut, and whether or not those cuts will be temporary or permanent. I can’t believe the Radical Left Democrats gave me this unprecedented opportunity.”

Thus far, the Department of Energy announced that it would be cancelling nearly $8 billion of clean energy and infrastructure projects in states that voted for former Vice President Kamala Harris in the 2024 election, and the Office of Management and Budget (OMB) separately postponed funding for major infrastructure projects in New York and Illinois. Additionally, OMB Director Russ Vought instructed agencies to develop reduction-in-force plans to further shrink the size of the federal workforce, although specifics have not been released as unions representing federal workers preemptively sued the Trump Administration. We will be watching closely to see if the Trump Administration will pursue cuts to agencies or programs that do not align with the Administration’s vision as the shutdown continues, including the National Oceanic and Atmospheric Administration, the Centers for Disease Control and Prevention, the National Science Foundation and more – agencies that were either “zeroed out” or faced steep cuts in the President’s Budget Request for FY2026.

Democrats, meanwhile, have focused their message on health care, specifically, extending Affordable Care Act premium tax credits that are due to expire at the end of the year. Without Congressional action, millions of Americans will likely see significant hikes to their premiums and Congressional Democrats are using this message, along with highlighting previously-enacted Medicaid cuts included as part of the One, Big Beautiful Bill Act, that continue to poll unfavorably across the country. While the Democratic-led CR also includes provisions to restore Congress’ “power of the purse” – think preventing future unilateral cuts and rescissions packages – that message does not poll as well publicly so it is not mentioned often.

The Office of the Vice President for Research and the Office of the Vice President for Government Relations developed a webpage that goes into more detail about the appropriations process, budget reconciliation and passbacks. If you have any questions, please contact the Office of Federal Relations at [email protected].

President Trump recently issued an executive order (EO) – Improving Oversight of Federal Grantmaking – that could dramatically reshape how federal agencies review new funding opportunity announcements and discretionary grants. The EO instructs each agency to designate a senior appointee – think a political appointee rather than a career official – to manage this review in coordination with the Office of Management and Budget. One of the main elements of this EO is to align research decisions with President Trump’s priorities, for example: 

• Discretionary awards must, where applicable, demonstrably advance the president’s policy priorities, and 
• Discretionary awards should not be used to “promote” or “encourage” any form of racial discrimination, gender identity, illegal immigration, or “other initiatives that compromise public safety or promote anti-American values.”

The executive order also includes two new provisions that are relevant to colleges and universities. First, it instructs agencies to give preference to an institution with a lower indirect cost rate, even as higher education associations and other interested parties continue to engage the administration on a new model for indirect costs. Second, the EO instructs agencies to diversify recipients of federal grants as opposed to what they consider to be “repeat players,” which undoubtedly targets institutions of higher education with robust research enterprises like the University of Michigan.

While this executive order was only recently announced, I expect that there will be noticeable changes coming out of federal agencies in the near future. Many of the changes in this EO have already been implemented to a degree as the administration has terminated hundreds of millions of dollars of grants focused on COVID-19, DEI, transgender health and more. For example, in late August, the Supreme Court upheld the Trump Administration’s decision to terminate $783 million of National Institutes of Health grants on those topics. With this EO now in effect, agencies will add an extra layer of review to ensure that funding opportunities prohibit this kind of research, which will impact grant submissions from not just U-M, but researchers nationwide. As additional information becomes available, the Office of Federal Relations will work with OVPR to share guidance and feedback.

The Office of the Vice President for Research and the Office of the Vice President for Government Relations developed a webpage that goes into more detail about the appropriations process, budget reconciliation and passbacks. If you have any questions, please contact the Office of Federal Relations at [email protected].

The U.S. House departed Washington, D.C., a day earlier than previously scheduled, leaving just a few weeks in September to pass the majority of its Fiscal Year (FY) 2026 funding bills. Over in the U.S. Senate, the story is much the same. Although the Senate Committee on Appropriations has approved a majority of its spending bills in a bipartisan manner in committee, Senate Republican leadership has not been as successful on the Senate floor. As a result, both chambers will return to Washington, D.C., with less than a month to complete work on FY26. However, there are many roadblocks that lead me to believe that a continuing resolution (CR) – or a potential shutdown – is the most likely scenario. 

While Republican House appropriators have generally introduced bills with funding levels similar to those in the president’s budget request, the Senate has taken a different approach as most of their bills are at similar levels to the CR for FY25. However, Office of Management and Budget Director Russ Vought’s recent comments about removing bipartisanship from the annual appropriations process could have a damaging impact on the next month as Senate Democrats remain skeptical about efforts to cut funding and the potential for a second rescissions package.

Below are a few resources that you may find useful to track the FY26 appropriations cycle:

• Congressional Research Service (CRS) Appropriations Status Table
• American Association for the Advancement of Science (AAAS) R&D Appropriations Dashboard
• Association of Public and Land-Grant Universities (APLU) Federal Budget and Appropriations
• Association of American Universities (AAU) Appropriation Tables

The Office of the Vice President for Research and the Office of the Vice President for Government Relations developed a webpage that goes into more detail about the appropriations process, budget reconciliation and passbacks. If you have any questions, please contact the Office of Federal Relations at [email protected].

While the U.S. Senate has spent much of the first half of the year processing nominations – and recently, the budget reconciliation legislation – the U.S. House has been moving full speed ahead with its appropriations work. Starting in June, the House Committee on Appropriations began holding subcommittee and full committee mark-ups, and last week, the full House approved the first Fiscal Year 2026 funding bill of the cycle, which established funding levels for military construction and veterans affairs. Over the next few weeks, House leadership will attempt to pass the remaining 11 funding bills. However, it is possible that the slim Republican majority will make it difficult to pass a few of the more contentious bills, such as those that fund the Departments of Defense, Education, Health and Human Services, Homeland Security and Labor.

It’s important to note that the House’s funding bills may look dramatically different than their counterparts introduced in the Senate. While the House plans to fund the federal government at levels in line with President Donald Trump’s budget request – which calls for cutting non-defense discretionary spending by almost a quarter from current levels – it will be nearly impossible for Senate Republican leadership to muster the 60 votes needed to fund the government with those cuts. To that end, Senator Susan Collins (R-ME) – the top Republican on the Senate Committee on Appropriations – has not indicated how she plans to proceed with FY26 funding bills. Senate appropriators, unlike their House counterparts, also questioned – and in some cases, openly challenged – President Trump’s cabinet officials when they appeared before the panel to justify their FY26 budget requests, demonstrating that not all Congressional Republicans are on board with massive reductions, especially to the federal government’s vast research enterprise. 

The Trump Administration has targeted indirect costs as part of its efforts to reduce federal government spending, with several agencies issuing directives to cap their indirect cost rates at 15%. In response, several lawsuits have been filed to stop the cuts, with the University of Michigan joining other universities and higher education associations to prevent this action at both the Department of Energy and the National Science Foundation. Last month, U.S. District Judge Indira Talwani granted summary judgment in favor of higher education organizations and institutions that had sued to prevent the NSF’s 15% indirect cost rate from going into effect. This decision follows a series of similar judgments by federal district courts that have paused indirect cost rate caps from going into effect at the National Institutes of Health, Department of Defense and Department of Energy.

Recognizing the persistent challenge to indirect costs, several major national associations representing academic and research institutions jointly launched an effort in early 2025 aimed at reforming how indirect research costs are reimbursed. Two provisional models were designed explicitly to gather community feedback and enable institutions to test their practicality, impact and effectiveness in achieving improved cost recovery and administrative efficiency. In the coming weeks, following the incorporation of community feedback and evaluation of the two provisional models, a single model will be put forward for consideration – by the research community, the Congress and the Trump Administration. The Financial Accountability in Research (FAIR) model will represent a new approach for funding the U.S. scientific enterprise and maintaining U.S. competitiveness for decades to come. We expect to have more information to share with the U-M community very soon.

The Office of the Vice President for Research and the Office of the Vice President for Government Relations developed a webpage that goes into more detail about the appropriations process, budget reconciliation and passbacks. If you have any questions, please contact the Office of Federal Relations at [email protected].

We encourage you to visit the OVPR website to read Neil’s insightful responses. 

On May 30, the White House Office of Management and Budget released an appendix to the skinny budget with further details about President Trump’s proposed funding levels for Fiscal Year 2026. Simultaneously, agencies across the federal government began releasing “budgets in brief,” more targeted looks at each agency’s plan for the upcoming fiscal year. The Office of Federal Relations is tracking these documents as they become available and updating this memo. Unsurprisingly, the PBR followed through with a nearly 25% cut to non-defense discretionary spending, including a roughly $12 billion reduction at the Department of Education, an $18 billion reduction at the National Institutes of Health and a $5 billion reduction at the National Science Foundation, among others.

Rep. Tom Cole (R-OK), the chair of the House Committee on Appropriations, indicated that the House will move funding bills in alignment with President Trump’s proposed funding levels beginning this week. We do not expect the same to take place in the Senate under the leadership of Chair Sen. Susan Collins (R-ME). During the annual budget hearings before both the House and Senate Appropriations Committees, members of President Trump’s cabinet have been under fire from both Democrats and Republicans regarding proposed cuts to the federal research enterprise and the impact that capping indirect costs will have on the United States’ ability to remain the global leader in cutting-edge research. As these committees transition from budget hearings to drafting appropriations bills, the potential for a large gap in topline spending levels between the two chambers could lead to a government funding showdown later this fall.

At the end of May, Secretary of State Marco Rubio announced that the State Department will “aggressively revoke” visas for Chinese students at universities across the country with ties to the Chinese Communist Party or those studying in “critical fields.” The ambiguous nature of this announcement has sparked confusion at institutions across the country as the implementation of this could lead to either a targeted or complete revocation of visas held by Chinese students.

This announcement comes on the heels of a previously announced policy by the State Department that would put a pause on new student and exchange visitor visa interviews while the agency finalizes updated social media screening protocols. That guidance still has not been released, and while the pause is being described publicly as “short,” there is still no clear timeline for when interviews will resume. However, students with existing appointments are still moving through the process for now. The pause comes during peak visa season after students have already accepted admissions offers for the upcoming fall semester. The American Council on Education and more than 30 other organizations wrote a letter to Secretary Rubio laying out concerns about the pause in student visa interviews and urging for clarity.

Each year, the president submits their President’s Budget Request (PBR) to Congress, outlining the Administration’s desired funding levels for both defense and non-defense discretionary spending. While President Trump transmitted a “skinny budget” – an abbreviated version of a PBR – to Congress on May 2, we expect a more formal and comprehensive request will be sent by the end of the month. 

While the PBR allows a president to set a marker for how they would like to see the government funded for the upcoming fiscal year, it is Congress’ responsibility to draft funding bills that will ultimately determine funding levels for federal government departments, agencies and programs. In the simplest terms possible, the PBR is just that – a request. In fact, it is not uncommon for congressional majorities to draft funding bills that are at odds with PBRs submitted by a president of the same party. And this year will likely be no different, as several key congressional leaders have already voiced their concerns with President Trump’s vision for FY 2026. 

Now that Congress has a better understanding of President Trump’s desired funding levels for FY 2026, the House of Representatives and Senate will kick off the annual appropriations process. Over the next few months, cabinet secretaries will “defend” their respective budget requests before both chambers’ appropriations committees. Congressional offices will have an opportunity to submit a list of their top programmatic requests to all 12 subcommittees. Finally, every appropriations subcommittee – in both chambers – will draft legislation to fund agencies within their respective jurisdictions. It is also not uncommon for the House and Senate to introduce bills that set funding levels at very different levels, and this year will be no exception as we expect the House to more closely mirror President Trump’s PBR while the Senate will likely introduce funding bills that resemble the final FY 2025 levels. 

By mid-May, Congress would traditionally be weeks into the annual appropriations process. However, President Trump’s aggressive – and so far, unilateral – actions to reduce the size and scope of the federal government have complicated Congress’ “power of the purse.” Instead, congressional Republicans have been working with the White House to achieve one of their shared priorities – using the budget reconciliation process to extend and create new tax cuts, invest in energy, defense and border security and reduce federal government spending. Budget reconciliation allows Congress to make changes to taxes, spending or the debt limit with only a simple majority vote in the Senate, which is critical for congressional Republicans and President Trump because they otherwise would not have enough votes to overcome a 60-vote filibuster.

While Congress pursues a more formal process to reduce federal government spending, the Trump administration has deployed the Department of Government Efficiency and the Office of Management and Budget (OMB) to identify spending that it argues no longer aligns with federal priorities. In response, the administration has terminated grants, frozen funding to institutions of higher education, pushed reductions-in-force and is considering a funding rescission package as part of a multi-pronged approach to reduce federal spending. There is also concern that OMB will instruct agencies to spend FY 2025 funds at the same level as President Trump’s FY 2026 PBR, which could lead to unexpected and reduced funding for programs across the federal government.

On March 14, Congress cleared the text of a continuing resolution (CR) to provide funding for the remainder of the federal government’s Fiscal Year 2025 (FY25), which ends on Sept. 30. Overall, the bill would cut non-defense funding by a net $13 billion and increase defense funding by $6 billion, compared to Fiscal Year 2024 (FY24). The largest cut is a $20 billion rescission from the Internal Revenue Service. The bill includes no earmarks in most FY25 accounts. 

The Association of Public and Land-Grant Universities’ Office of Governmental Affairs analyzed the impact the measure would have on member institutions, which includes the University of Michigan. Highlights include the following: 

Commerce, Justice and Science: The CR continues funding for the National Science Foundation, NASA, the National Oceanic and Atmospheric Administration and the National Institute of Standards and Technology at FY24 levels with limited programmatic direction. 

Defense: All Defense Department Research, Development, Test and Evaluation (RDT&E) accounts are cut by 5% or more below FY24 enacted amounts. The bill also cuts FY25 funding for the Congressionally Directed Medical Research Program by 57% from FY24 enacted levels, from $1.509 billion in FY24 to $650 million. 

Energy and Water Development: The CR continues funding for the Department of Energy’s Office of Science and ARPA-E at FY24 levels with no programmatic direction. 

Interior and Environment: The CR continues funding for the Environmental Protection Agency’s Office of Science at FY24 levels with the elimination of congressionally directed spending under the account, thus reducing levels by $2 million. 

Labor, Health and Human Services and Education: The CR maintains the existing language contained in FY24 Labor, Health and Human Services appropriations for the National Institutes of Health, which includes a prohibition on modifying current facilities and administrative (F&A) reimbursement rates. The bill reduces the overall FY24 funding level for the Department of Education’s higher education heading by $202 million, eliminating the amount available for higher education earmarks in FY25. 

The University of Michigan’s Office of Federal Relations serves as the institution’s “voice” in Washington, D.C., and it is our responsibility to engage with the state’s congressional delegation. We are also registered to lobby on behalf of U-M, which is an important distinction when it comes to advocacy efforts before the U.S. Congress. However, we rely on faculty across campus to inform our efforts and share specific impacts to U-M, something we are not able to accomplish without your partnership. In this constantly evolving environment, please do not hesitate to reach out to our team via email at [email protected] so we can assist with any advocacy efforts.

Aside from the Office of Federal Relations, there are also opportunities to engage in advocacy efforts through relevant organizations, including those at both the regional and national levels. In many cases, these organizations will provide talking points to explain how funding issues related to federal research would impact research and innovation. 

Please see below for a few tips:

• We ask U-M employees to coordinate advocacy with our office so that we can be clear, consistent and in compliance with federal reporting requirements.

• When engaging in professional society contacts with the federal government, be careful not to speak on behalf of the university unless coordinated with our office. Do not sign letters on behalf of the university or use U-M letterhead for such contacts.
• Nothing prevents university employees from expressing personal views on personal time with personal resources. 
• The ultimate goal of advocacy is to ensure lawmakers understand the role of sustained research funding, and our team will work with you to tailor that message.

 

Due to legal challenges facing President Donald Trump’s executive orders and directives – as well as efforts across federal agencies – there is a degree of uncertainty facing federal research agencies. For example, the White House Office of Management and Budget’s memo to freeze federal aid and funding was halted by two federal judges, and although the White House rescinded the memo, White House Press Secretary Karoline Leavitt added confusion by proclaiming that action was purely to rescind the memo, not the president’s efforts to freeze federal funding. 

While agencies continue to implement the various executive orders issued by President Trump (for example, those related to DEI, climate justice, etc.) researchers should expect to see further efforts to understand whether grants are in conflict with these orders and therefore subject to cancellation. 

The federal government is currently operating under a continuing resolution that expires on March 14, leaving congressional leaders with a little more than a month to reach an agreement. However, due to recent actions and the threat that federal funding could be withheld by the Trump Administration, it appears unlikely that Democratic leaders are willing to work with their Republican counterparts, arguing that they are not negotiating in good faith. In fact, there are now rumors floating that Republicans could seek to pass a full-year continuing resolution to avoid a shutdown threat altogether.

Part of the delay in government funding has been efforts in both chambers to kick-start congressional Republicans’ efforts to pass budget reconciliation, which would include many top policy priorities for President Trump, including national security, defense and energy spending, along with extending many of the tax cuts from the 2017 Tax Cuts and Jobs Act. With a small margin in both chambers – especially in the House – leaders are struggling to find a framework that every member of the caucus can support. 

There are also media reports circulating that the Trump Administration is planning to drastically reduce the federal workforce at the Department of Health and Human Services, including at the Food and Drug Administration, Centers for Disease Control and Prevention and others. Additional reporting suggests that the administration could eliminate between a quarter and a half of the workforce at the National Science Foundation. This follows a series of efforts to reduce the size of the federal workforce’s footprint, such as dismantling the U.S. Agency for International Development and offering a retirement option to virtually all employees, although that is now facing a legal challenge as well.

Universities and the federal government have a long-standing and successful partnership that grew out of World War II. The federal government relies on universities to conduct research in the national interest. This includes research aimed at meeting specific national goals such as health and welfare, economic growth, and national defense. 

Performing research on behalf of federal agencies incurs a variety of costs that would not otherwise exist for universities. Universities – not the federal government – assume the risk of building the necessary infrastructure to support this research in anticipation that their research faculty will successfully compete for federal research grants and thus the university will be reimbursed for a part of the associated infrastructure costs.

Over the past several years, the share of institutional support that colleges and universities provide to support research conducted by their faculty has grown faster than any other sector. This increase is due in part to the rising compliance costs associated with increased federal research regulations and reporting requirements. 

Despite the increasing administrative costs required for compliance, the amount universities can receive from the government for these costs has been capped at a flat rate by the Office of Management and Budget (OMB) since 1991. This cap only applies to higher education institutions. Unlike other sectors that conduct government research, universities must therefore subsidize compliance costs from their own financial resources. 

The University of Michigan’s 56% F&A cost reimbursement rate, like those of all universities, is determined through a rigorous review and audit by federal agencies and university administrators. This rate is based on actual funds previously spent on facilities and administrative (F&A) costs.

F&A rates vary across institutions because expenses such as construction, maintenance, utilities, and administration differ by university and region. Additional factors—such as the age and condition of buildings and the extent of renovations or new construction needed to support specific research projects—also influence these rates.

For more information: 

https://www.cogr.edu/fa-cost-reimbursement-materials-0

https://www.cogr.edu/sites/default/files/Costs_of_Federal_Research_Infographic_Update_Final.pdf

In the coming months, we will see many bills and other proposals for legislation that may propose to change federal research funding priorities. This happens every time a new party obtains control of Congress or the White House.

While there has been an increased focus on cutting overall government spending – thanks in part to the proposed Department of Government Efficiency – it is important to note that reducing the scale of the federal government and resulting government spending has been a Republican priority for many years.

During the first two years of President Donald Trump’s first term, when Republicans also controlled both chambers of Congress, there also was a focus on reducing the size of the federal government and major changes never materialized. Members of the House and Senate Committees on Appropriations pride themselves on their ability to stay out of partisan fights while drafting spending bills that reflect the policy objectives of their parties.

While the Trump Administration will undoubtedly influence federal research policy, it’s also important to note that individual members of Congress – especially those with leadership positions on key committees – have their own priorities, too. It is not uncommon for a Congress led by the same party as the president to ultimately pass funding bills that do not align with all of the president’s budget requests. We believe that there will be a shift in research priorities and policy, with a larger focus on the following:

• Industries of the Future: artificial intelligence, advanced manufacturing, and quantum computing
• National Security: defense and homeland security
• Space

For reference, the Office of Federal Relations has been analyzing what proposed policy and funding changes could be debated as Republicans return to the majority in both chambers of Congress.

During the last Congress, several key legislators took an interest in making changes they said would modernize the NIH, reflected in separate proposals released by then-House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-WA) and then-Senate Health, Education, Labor, and Pensions Committee Ranking Member Bill Cassidy (R-LA). As the top Republicans on the House Energy & Commerce and Senate Health, Education, Labor, and Pensions (HELP) Committees, respectively, these proposals could be viewed as benchmarks for potential Congressional activity in the future.

However, it is worth noting two key factors while analyzing these proposals:

• Senator Cassidy is now the chairman of the Senate HELP Committee, meaning he will have a larger role in crafting health policy, and
• Rep. McMorris Rodgers retired at the end of the last Congress and her successor, Chairman Brett Guthrie (R-KY), will likely want to put his own mark on NIH reform, should that raise to be a top priority for him.

Chair Cassidy’s white paper stems from a request to stakeholders last year to solicit feedback on policies Congress should consider to modernize NIH. While this proposal can be viewed more as a framework by interested parties and less of a formal proposal, it is difficult to say how the senator decided what feedback should be incorporated into this document. The white paper only notes that respondents ranged from academic institutions, relevant professional societies, think tanks, trade associations, patient advocates and individual researchers.

On the other hand, former Chair McMorris Rodgers released a broad framework for sweeping reforms across the NIH to tackle issues including the consolidation of institutes, tenure length for institute directors, sexual harassment issues at NIH and funding sources. Key takeaways include:

• The reduction of the number of institutes from 27 to 15. While certain institutes would continue to exist as-is, others would be consolidated to form institutes focusing on broader issue topic areas, moving away from more niche demographic topics towards a more holistic approach while other standalone institutes would also be rebranded or split apart.
  
• One major change would be the consolidation of the Advanced Research Projects Agency for Health (ARPA-H) with the National Center for Advancing Translational Sciences, the National Institute of Biomedical Imaging and Bioengineering and the Common Fund to create the “National Institute on Innovation and Advanced Research.” As the preeminent agency for funding high-risk, high-reward health research, ARPA-H funds research projects that may otherwise not receive federal support but have the potential to realize major implications and improvements for health sciences. To couch ARPA-H into a broader Institute could diminish its impact and ability to promote such innovative research.
  
• Notably, the funding for the consolidated institutes would not be cut. Instead, certain institutes would receive a boost in funding in addition to the combined funding pools for the original institutes.
• The framework also criticizes the “stagnant nature of leadership” at the NIH, calling for tenure limits for institute directors. To address this, the framework proposes implementing five-year tenure limits for directors, with the ability to serve up to two terms at the discretion of the NIH director.
• The proposal emphasizes the need to address current NIH funding mechanisms,  both in how the agency and its respective institutes are funded as well as how grants from NIH are meted out to researchers. 

The relationship between Chairs Cassidy and Guthrie will also signal how much traction NIH reform has in the upcoming Congress. If both chairs pursue their own reform ideas, it will likely complicate a potential compromise, while a close partnership likely indicates NIH reform has a real chance at success. It will also be interesting to see the general appetite for taking on a large-scale NIH reform amid other key legislative initiatives competing for attention in the new Congress.

The Office of Federal Relations has drafted a memo with additional information on each NIH-reform proposal. 

As many in the research enterprise at U-M know, facilities and administration (F&A) costs – also referred to as “indirect costs” – are essential costs of conducting research. The federal government’s long standing recognition and payment of its share of these costs has helped U.S. universities build and support the required research infrastructure that has made the American research enterprise the best in the world. Cuts to F&A research costs are cuts to research. If such cuts are made, they will reduce the amount of research that universities and their scientists can conduct on behalf of the federal government to achieve key national goals to improve the health and welfare of the American people, grow the economy and enhance our national security.

The process of determining F&A cost reimbursements, including how university F&A cost rates are established and why this system is both equitable and efficient, is inherently complex. Understanding these costs — and their essential role in supporting federally funded research — is not easily distilled into simple explanations.

Then-President Trump’s proposed FY 2018 budget suggested placing a 10% cap on all F&A cost reimbursements for NIH, leading many to believe that with a focus on efforts to curtail overall government spending, the incoming administration may undertake additional attempts to cap or significantly reduce F&A cost reimbursements. While some members of Congress remain critical of F&A reimbursements, it is important to note that House Appropriation Committee Chairman Tom Cole (R-OK) has stated on the record that “proposed F&A rate cut[s] would drastically reduce the amount and quality of research conducted in the U.S.”   

U-M works in close collaboration with peers in higher education and other institutions to advocate for federal research funding that saves and improves lives and creates opportunities for our state, nation and world. This advocacy includes a focus on communicating the critical importance of facilities and administration reimbursements to U-M’s research efforts.

OVPR and U-M’s Federal Relations Office are diligently tracking new developments and committed to keeping you informed with pertinent updates. We will continue to share information through existing communication channels (newsletters such as VPR Update and U-M Federal Relations’ Washington Update – sign up HERE) and look to expand our in-person touch-points,  utilizing time at key meetings to update research leadership; scheduling town hall meetings, brown bags and unit-specific meetings to engage the broader research community and offering “office hours” for faculty and staff to ask questions and engage with federal relations staff to ensure time for topic-specific questions.

We stand ready to catalyze, safeguard, and support your world-changing research.