Council warned of federal grant volatility as FY2027 state aid package is detailed

Prince George’s County Office of Management and Budget briefed the County Council on Feb. 10 about risks to federal grants and the state aid outlook for FY2027, highlighting a volatile federal grant environment and several state actions that reduce or cap county aid.

OMB’s Diana Baker Mims told the council that recent executive actions require many federal grant-making agencies to insert "termination for convenience" clauses into awards, a change that can allow the federal government to rescind funds if programs fall out of alignment with federal priorities. "These termination for convenience clauses may be implemented as programs are further aligned with policy," she said, warning that counties can see awards rescinded mid‑cycle and that vendors and nonprofits should invoice promptly to protect reimbursements.

Staff estimated roughly $200 million in external federal dollars the county typically manages, with a recent estimate for FY2027 pegged around $225 million, the bulk of which are pass-through grants such as housing and entitlement programs. David Giuppa and other OMB staff recommended monitoring awards closely and maintaining appropriation authority so agencies can accept awards if they are issued.

On the state side, staff said total aid to the county for FY2027 is about $2.2 billion, an increase of roughly $78 million over the prior year, with most of the increase flowing to K–12 education through the Blueprint for Maryland’s Future. Morgan Weisman described specific K–12 changes: higher foundation aid per pupil, increases in compensatory aid tied to a revised formula and a $20 million increase in the concentration-of-poverty program.

But the briefing also identified reductions and caps that will reduce county general fund support: a hard cap on the disparity grant is estimated to cut Prince George’s County by about $17.5 million in FY2027; a 3% cap on state community college increases will reduce expected aid by roughly $4.5 million; and the state has phased in new county cost-sharing for an assisted outpatient mental illness treatment program, requiring counties to reimburse a growing share of costs if the state implements the program in a jurisdiction. Staff also flagged a new county obligation increase for teacher, community college and library retirement costs totaling about $18.7 million in FY2027.

Council members pressed staff on exposure and timeline. Council Member Harrison urged urgency about federal responses, saying, "the office of law should just be suing the snot out of the federal government right now," underscoring frustration about federal actions that could threaten local programs. Staff reiterated they were monitoring federal websites and award notices and would continue to update the council.

Next steps: OMB will provide ongoing updates during the budget season and supply detail by agency and program so council members can evaluate potential county backfills for lost grant funding.