Update on FY2027 Federal Budget and Proposed Federal Grant Rule Changes

Dear Independent Living Community,

We are writing to provide you with an update on the Federal Fiscal Year 2027 Budget and an update on the recent Notice of Proposed Rulemaking (NPRM) issued by the Office of Management and Budget (OMB), titled Federal Grant Rule Changes.

On September 1, the House of Representatives voted 370-48 to approve a Continuing Resolution (CR) that will fund the federal government through December 11, 2026. The Senate previously approved the bill on August 8 by a vote of 90-6. The legislation was signed by President Trump on Wednesday, September 2.

What does this mean for Independent Living Program Funding and the FY2027 Budget?

The Continuing Resolution maintains funding at FY2026 levels through December 11, 2026. Congress will need to continue to work to pass the FY2027 appropriations bills.

The Independent Living Program has two appropriations line items of federal funding. We frequently refer to these line items as Part B and Part C funds, in reference to their authorization within the Rehabilitation Act.

Part B funds are provided to the states to support and expand independent living services. The federal government awards state governments, which pay the funds out to the Centers for Independent Living (CILs) and Statewide Independent Living Councils (SILCs) that rely on them in accordance with the State Plan for Independent Living (SPIL).

Part C funds support local community-based, consumer-controlled Centers for Independent Living that offer direct services to people with disabilities. Part C funding is a direct award from the Administration for Community Living (ACL) to CILs.

Part B and Part C funds have different grant cycles. Here is the description of those cycles, and how the recently-passed Continuing Resolution impacts the distribution of each.

Part B Funding

The Part B awards grant cycle aligns with the federal fiscal year, beginning on October 1. The CR provides level funding for Part B through December 11, 2026. This means that Part B FY2027 funding has only been appropriated through December 11, 2026. If Congress fails to pass additional FY2027 funding legislation, we may see a disruption of this funding as we have in previous government shutdowns.

Part C Funding

Part C grant awards begin on September 30, the last day of the federal fiscal year. The funds for the grant cycle that begins on September 30 are Federal Fiscal FY2026 funds. So, the funds being awarded from the current FY2027 budget process would not be awarded until September 30, 2027. As long as a full year of appropriations is passed through either an appropriations package or a combination of continuing resolutions, there would not be a disruption of the Part C funding.

NCIL will continue to push for timely notices of awards for both the Part B funds appropriated in the Continuing Resolution and the next Part C grant cycles.

What does this mean for the recent Notice of Proposed Rulemaking (NPRM) issued by the Office of Management and Budget (OMB), titled Federal Grant Rule Changes?

For more information on what the NPRM is, see NCIL’s previous explainer.

The Continuing Resolution temporarily blocks implementation of the Proposed Rule. Under the CR, OMB is prohibited from issuing or finalizing the proposed rule through December 11, and any version finalized before then cannot take effect during that period. This delay will allow time for additional advocacy to take place and additional time for Congress to evaluate the proposal.

If you have any questions, please contact NCIL Director of Advocacy and Public Policy Jessica Podesva at jessica@ncil.org.