PGCPS officials warn federal funding uncertainty could squeeze 2026 budget, flag Medicaid and meal reimbursements

Prince George's County Public Schools officials told the County Council Education & Workforce Development Committee on March 10 that while most federal grant funding remains intact for the current year, several revenue streams could be at risk in fiscal 2026, potentially creating budget pressure for the district.

The district's chief financial officer, Lisa Howell, told committee members that "95% of the federal awards received by PGCPS are not currently impacted," but she named competitive grants, Medicaid reimbursements for school-based services and food and nutrition reimbursements as areas of concern going into 2026. Howell said the district is monitoring executive orders and federal guidance and preparing contingency plans for multiple scenarios.

Why it matters: PGCPS receives substantial federal funding that supports special education, Title programs, nutrition services and other core operations. Disruptions to reimbursements or the loss of competitive awards would reduce funds the district expects to receive and could require reallocation or cuts in future budgets.

Howell described federal funding in three broad buckets: entitlement/formula grants (Title I, II, III, IV and Perkins); special education funding under the Individuals with Disabilities Education Act (IDEA); and other federal resources such as COVID-relief grants, JROTC support and competitive awards. She said special education reimbursements tied to Medicaid are a particular risk for 2026, noting the district currently records a Medicaid reimbursement line of $12,400,000. "If there's any shifting of that from the federal level to the state or local level or if the level of reimbursement changes, that will certainly have a direct impact on services that we will have to continue to provide," Howell said.

Food and nutrition services: Mary Kirkland, director of Food and Nutrition Services, told the committee she did not have exact counts at the table but estimated that "more than 80%" of students participate in some meal program; later in the briefing staff provided the council with an official figure that over 62% of students qualify as economically disadvantaged (the district said this combines free and reduced categories). Howell and other officials said the child nutrition program holds its own restricted fund balance that, for now, would allow the district to operate meal programs through the end of the fiscal year even in a federal pause. Howell cautioned that the nutrition fund balance is restricted: "that fund balance is very different, and cannot be commingled with the district's typical fund balance," she said, and any excess must be reinvested into child nutrition operations and equipment rather than general district needs.

Competitive grants and COVID-era funds: Howell said some competitive awards have already been paused — including the EPA school bus rebate program the district had been pursuing — and that COVID-relief ESSER funding is winding down, with liquidation deadlines stretching into fall 2025 for some projects. The district reported an overall federal funding total near $219 million for the current year and expects approximately $141 million in 2026 as COVID-relief dollars expire.

Medicaid billing and services: Committee members asked about what services are billable. Charles Tyler, the district's Medicaid manager, explained that reimbursements typically cover services for students with individualized education programs (IEPs), such as speech, occupational and physical therapy, and some behavioral-health services. Tyler said nursing is billable but is a small portion of total Medicaid revenue. He added that the state is working on expanding Medicaid billing options but said federal guidance could affect what is reimbursable going forward.

Contingency planning and timing: Howell said most state-pass-through reimbursements are requested monthly; some federal reimbursements are requested quarterly, which gives the district recurring visibility into cash flow. "For many of our entitlement grants that pass through from the state, we request reimbursement from those on a monthly basis," she said. That cadence, Howell said, gives the district time to adjust if reimbursement patterns change, but the district is actively modeling scenarios for 2026.

Council members pressed staff on what steps the district has already taken to reduce risk, including applying for state grant opportunities to replace paused federal competitive awards (Howell noted an MEA opportunity with up to $3.5 million) and aligning remaining ESSER projects to capital outlay where applicable. Officials also emphasized the role of the district's federal transition task force in tracking executive orders and potential policy changes.

What remains uncertain: Howell said there has been little formal guidance tied to recent executive orders and that the district's planning is contingent on clearer federal or state directives. She emphasized that some changes could take effect in 2026 and that the district is preparing for multiple scenarios rather than presuming outcomes.

Ending note: Committee members voted to move three financial transfer items forward (see separate article for votes). District leaders said they will continue to update the council as federal guidance becomes available and as budget planning for 2026 proceeds.