July 28 Federal Update: HHS and Department of Education Significantly Reduce Their Workforce 

The U.S. Departments of Health and Human Services and Education significantly reduced their workforce following a Supreme Court ruling that permitted the Trump Administration to proceed with its restructuring plans as litigation continues. 

The U.S. Department of Health and Human Services has reduced its staff by about 25% as it tries to consolidate its 28 divisions into 15 and reduce its 10 regional offices to 5. 

A limited primary injunction restricted layoffs in specific agencies, including the Centers for Disease Control and Prevention, the Food and Drug Administration’s Center for Tobacco Products, the Office of Head Start, and the Office of the Assistant Secretary for Planning and Evaluation. 

Additionally, the Supreme Court overruled a lower court and permitted the Department of Education to proceed with its plans to terminate as many as 1,400 employees, nearly a third of its workforce. 

President Trump Signs an Executive Order Addressing Homelessness  

On July 24, President Trump signed an executive order, Ending Crime and Disorder on America’s Streets, redirecting federal funding to provide unhoused individuals suffering from serious mental illness or addiction with assisted outpatient treatment and care from treatment centers and similar facilities. The order redirects federal resources toward programs treating substance use. It also enables state and local governments‘ to implement “maximally flexible civil commitment, institutional treatment, and ‘step-down’ treatment standards that allow for the appropriate commitment” of unhoused individuals who are a danger to themselves or others.  

Recipients of federal housing and homelessness assistance who engage in illegal practices or practice harm reduction and safe consumption efforts may have their funding frozen. The order encourages all actions, to the greatest extent permitted by law, to end support for housing first policies that deprioritize accountability and fail to promote treatment, recovery, and self-sufficiency. 

The order permits recipients of federal funding for homelessness assistance to collect health-related information that the Secretary of Housing and Urban Development determines is necessary and effective to operate programs successfully. The data may then be shared with law enforcement authorities to provide appropriate care or to connect individuals with public health resources. Additionally, the order prioritizes funding for the expansion of drug and mental health courts. 

Senate Appropriations Committee Approves Transportation-HUD Bills 

The Senate Appropriations Committee voted 27 to 1 to approve the Fiscal Year 2026 Transportation, Housing and Urban Development, and Related Agencies Appropriations Act. 

The bill significantly increases funding for rental assistance programs, including through a $1.3 billion increase for tenant-based Section 8 vouchers compared to fiscal year 2025. The bill also appropriates $30 million for new incremental vouchers available to youth within, and those aging out of, the foster care system. 

The bill provides $4.5 billion for Homeless Assistance Grants, a $479 million increase above fiscal year 2025. Key allocations include $100 million toward new, permanent supportive housing, $107 million for new investments to address youth homelessness, and $52 million for new supports for survivors of domestic violence. 

For further information, the U.S. Senate Committee on Appropriations published a summary of key provisions within the bill. 

https://www.appropriations.senate.gov/imo/media/doc/fy26_thud_senate_bill_summary.pdf

HHS Issues Guidance Regarding DEI Initiatives to SSBG, CCDBG, and CBG Recipients 

The Office of Community Services (OCS) strongly encourages all recipients of entitlement awards funded by Title XX of the Social Security Act to review all Intended Use Plans, pre-expenditure reports, and expenditures and services under these programs, including those made by subrecipients or contractors. Recipients are advised to ensure that they do not support diversity, equity, and inclusion (DEI) initiatives or any other initiatives that discriminate on the basis of race, color, religion, sex, national origin, or any other protected characteristic.  

Likewise, the Office of Child Care (OCC) strongly encouraged all recipients of formula awards funded by the Child Care and Development Block Grant (CCDBG) Act to review all plans, services, strategies, and expenditures under these programs, including those made by subrecipients or contractors. 

OCC and OCS recommend recipients take prompt action to conduct reviews for compliance with all applicable laws. Individuals are strongly encouraged to review budgets, budget justification narratives, program goals, and other materials to ensure that federal funds are not used for unlawful DEI initiatives. Expenditures found to be out of compliance with federal law may be subject to enforcement in accordance with applicable law and the terms and conditions of the award. 

Congress Rescinds Public Broadcasting and Foreign Aid 

Congress recently passed H.R. 4, the Rescissions Act of 2025. The bill rescinds $9 billion in previously appropriated funds, including approximately $1.1 billion for the Corporation for Public Broadcasting and $8 billion in foreign aid. 

The House passed the bill by a vote of 216 to 213, and the Senate, 51 to 48. 

Congressional leaders stressed the importance of public radio in offering cultural, informational, and educational programming. They also highlighted its unique ability to provide individuals with access to vital emergency alerting and reporting in times of crisis. 

Moreover, the reductions in foreign aid directly impact the receipt of emergency shelter, water, health care, and family reunification for refugees and countries experiencing natural disasters and conflicts. 

CMS Works to Reduce Duplicate Enrollment in Medicaid/ACA Exchange Plans 

The Centers for Medicare & Medicaid Services (CMS) is partnering with states to reduce duplicate enrollments through three key initiatives. 

For Individuals Enrolled in Two or More Medicaid Programs, CMS will request that states verify eligibility. 

For Individuals Enrolled in Medicaid or CHIP and a Subsidized Federally Facilitated Exchange (FFE) Plan, CMS will request that individuals disenroll from Medicaid or CHIP if no longer eligible, end their subsidy (with the option to end their coverage), or notify the Exchange that the data match is incorrect. After 30 days, the FFE will end the subsidy for individuals who still appear to be enrolled in both Medicaid or CHIP and an Exchange plan with a subsidy. 

For Individuals Enrolled in Medicaid or CHIP and a Subsidized State-Based Exchange (SBE) Plan, CMS will provide SBEs with a list of individuals who are potentially enrolled in the state’s Medicaid or CHIP and a subsidized Exchange plan and ask SBEs to determine whether these individuals are dually enrolled, and if so, to implement a process, similar to the federal Exchange, to recheck eligibility. CMS will work with states to prevent individuals from losing coverage inappropriately. 

U.S. Department of Education Issues a Dear Colleague Letter Regarding H.R. 1 Implementation 

The U.S. Department of Education recently issued a Dear Colleague Letter outlining amendments to the Higher Education Act of 1965 through H.R. 1 that were enacted immediately.  

• Changes to Income Based Repayment (IBR) Plans: Borrowers no longer need to have a partial financial hardship to qualify for enrollment in an income-based repayment. 

• Parent PLUS Loan Repayment Options: Borrowers with a consolidation loan that repaid a Parent PLUS Loan  can now enroll in an IBR plan. 

• Public Service Loan Forgiveness: Payments made under the newly created Repayment Assistance Plan (RAP) are eligible for the Public Service Loan Forgiveness (PSLF) program if all other eligibility criteria are met. 

• Borrower Defense to Repayment Regulations: The Biden Administration’s Borrower Defense to Repayment regulations are delayed for loans that originated before July 1, 2035. The regulations established a new federal standard and process for deciding whether borrowers have a legal basis to discharge their federal Direct Loans. 

• Closed School Loan Discharge Regulations: The Biden Administration’s Closed School Loan Discharge regulations are delayed for any loans that originated before July 1, 2035. The regulations expanded access to automatic discharges and clarified the circumstances when borrowers who reenroll in a comparable program are not eligible for a discharge. 

Additionally, the letter provided notice that the Department is currently developing a schedule of loan reductions for part-time students. Reductions in the annual loan limit required by H.R. 1 will be made in proportion to the degree to which the student is not enrolled full-time, rounded to the nearest percentage point. Public comments will open later this year. 

CMS Restricts Workforce and Multiyear Eligibility Waivers 

The Centers for Medicare & Medicaid Services (CMS) recently issued two letters to states detailing that the agency does not anticipate approving new or extending existing section 1115 demonstration authorities, which expand continuous eligibility. CMS also stated that it does not anticipate approving new or extending existing Medicaid-funded workforce initiatives for training or employment-related activities. 

CMS highlighted the importance of the policy change to preserve these vital programs for the most vulnerable Americans by removing costly initiatives that are estimated to require more than a billion dollar investment.  

HUD Terminates PAVE Task Force 

The U.S. Department of Housing and Urban Development (HUD) and the Office of Information and Regulatory Affairs (OIRA) announced the termination of the Property Appraisal and Valuation Equity (PAVE) task force. The decision aligns with a recently issued executive order, Ending Radical and Wasteful Government DEI Programs and Preferencing. 

The task force was established to address systemic biases in the home appraisal process, particularly in the evaluation of properties in Black and Hispanic neighborhoods. However, HUD determined that by reducing the regulatory hurdles that lenders, appraisers, and other program participants face, the Federal Housing Administration will be better able to serve American homebuyers and homeowners. 

House Judiciary Subcommittee Examines Nonprofit Misuse of Federal Funds 

On July 15, the House Judiciary Subcommittee on Oversight held a hearing entitled, “How Leftist Nonprofit Networks Exploit Federal Tax Dollars to Advance a Radical Agenda.” Witnesses and representatives discussed the exploitation of federal tax dollars by nonprofits. They alleged nonprofits leveraged federal grants from the U.S. Agency for International Development and the Justice Department to fund causes fundamentally opposed to the national interests of Americans. 

Witnesses emphasized the importance of transparency, highlighting the substantial amount of federal funding received. They also detailed ideological perspectives espoused by nonprofits and the promotion of initiatives misaligned with the consensus of American citizens. Witnesses offered the examples of universities, museums, public broadcasters, and USAID as key institutions. 

Certain representatives highlighted the critical role of nonprofits in serving vulnerable populations, including by confronting transnational crime and supporting victims of trafficking and sexual abuse. The minority witness also highlighted the selection process and ongoing monitoring for nongovernment organizations that request and receive federal funding for programs such as law enforcement training, victim/witness assistance, and rule of law programming in countries professionalizing their criminal justice response. 

Homeland Security Committee Considers Nonprofit Involvement in Immigration Challenges Through the Biden Administration 

On July 16, the House Homeland Security Committee held a hearing entitled “An Inside Job: How NGOs Facilitated the Biden Border Crisis.” Representatives and witnesses discussed the vulnerability of unaccompanied minors to trafficking, exploitation, and forced labor. They stressed inadequate border security, frequency of falsified records, and a broad failure to aid and monitor unaccompanied minors properly. 

Witnesses and several representatives alleged that non-government organizations misused federal funds to aid in and incentivize illegal immigration. They recommended oversight to ensure proper stewardship of federal funds and promote clear, continuous communication with local governments. Specifically, witnesses recommended a complete forensic audit of all Office of Refugee Resettlement contracts exceeding $100 million, mandated transparent public disclosures, and independent federal oversight. 

Certain representatives stressed the harm of funding reductions and pauses. They highlighted the essential role of non-profits as non-political entities in serving vulnerable and marginalized communities. Representatives additionally raised concerns about the practices of U.S. Immigration and Customs Enforcement, including their detainment of American citizens, agents’ failure to identify themselves in arrests, and conditions of detention centers. 

Senate Subcommittee Discusses Educational Choice and Literacy 

On July 23, the Senate Committee on Health, Education, Labor, and Pensions’ Subcommittee on Education and the American Family held a hearing to discuss educational choice and literacy. The hearing centered family empowerment, the challenges the education system faces, and the need to support students in achieving academic success. 

Certain senators and the Vice President of the Board of Education for the San Diego Unified School District expressed concern in response to the increasing privatization of K-12 education. They jointly stressed the importance of investments in evidence-based strategies and support for students with the highest needs, including those with disabilities. 

Sector Updates from the Judiciary 

Federal Court Upholds State Restriction of Chemical Abortions 

The U.S. Court of Appeals for the Fourth Circuit determined that West Virginia is permitted to restrict access to the abortion-inducing drug, Mifepristone. The verdict isthe first federal appeals court’s ruling that Mifepristone may be subject to state restrictions prohibiting its use. 

The Court of Appeals held that Congress did not specifically indicate that the U.S. Food and Drug Administration had exclusive regulatory power over the medication. Additionally, the majority stressed states’ historic and sovereign right to protect the health and safety of their citizens. 

Court Pauses a Mississippi Education Law Prohibiting DEI Programs and Curriculum  

The U.S. District Court for the Southern District of Mississippi temporarily blocked HB 1193, a Mississippi law that prohibits the state’s public schools and universities from teaching “divisive concepts,” determining it likely violates the First Amendment. The law also prohibits the establishment or maintenance of diversity, equity, and inclusion (DEI) offices, programs, trainings, or activities.  

Judge Wingate determined that the law’s restrictions are excessively broad, and its vague language may be construed for arbitrary enforcement, fostering a risk that protected speech would be silenced. He also emphasized the harm that plaintiffs would experience through the threat of funding withdrawals and the pace and breadth of programmatic shutdowns. 

The temporary restraining order will remain in effect until the court rules on the plaintiffs’ motion for a preliminary injunction. If the preliminary injunction is successful, the law will not be enforced while litigation is occurring. 

Federal Appeals Court Upholds Constitutionality of Birthright Citizenship 

The 9th U.S. Circuit Court of Appeals determined that a recently issued executive order, Protecting the Meaning and Value of American Citizenship, is unconstitutional. The order denies citizenship to any individual born in the U.S. if they do not have at least one parent with permanent legal status. 

The court affirmed the necessity of a nationwide preliminary injunction issued by a lower court. The majority cited the executive order’s violation of the Citizenship Clause of the Constitution, precedent from previous litigation, and decades of Executive Branch practice. U.S. Circuit Judge Bumatay dissented, arguing that the states lacked a legal right to bring the lawsuit.  

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