Bringing you the latest news impacting our network from Congress and the Administration.
In this Edition:
FEDERAL FUNDING SECURED FOR REMAINDER OF FY26
HHS ANNOUNCES $100 MILLION FOR MENTAL HEALTH AND ADDICTION RECOVERY
FEDERAL RESCISSIONS TARGET HEALTH AND TRANSPORTATION FUNDS
CONGRESSIONAL SCRUTINY OF NONPROFITS CONTINUES
NEXT CAPITOL CONVERSATIONS: What to Expect in the Midterm Elections – 2/19 at 1:00 PM ET: REGISTER
WHAT WE’RE READING
Federal Funding Secured for Remainder of FY26, Despite DHS Dispute
Federal funding for Fiscal Year 2026 is secure following a February 3 House vote approving a bipartisan appropriations package that funds most federal agencies through September 30, 2026. The only exception is the Department of Homeland Security (DHS), whose funding remains on a short-term extension over disputes related to funding for Immigration and Customs Enforcement (ICE.)
Now what?
After a brief partial government shutdown, Congress also adopted a measure granting DHS a two-week funding extension, giving lawmakers until February 13 to renegotiate funding levels and enforcement authorities for ICE and Customs and Border Protection (CBP.) Democratic leaders including Senator Schumer (NY) and Representative Jeffries (NY-08) formally submitted their proposed ICE reforms to Republican leadership, signaling that negotiations over patrol authority, accountability measures, and use-of-force standards will continue to shape the final DHS funding bill. With funding for the Federal Emergency Management Agency (FEMA) included in the DHS appropriations bill, this may add some urgency, but negotiations are slow to progress and another partial shutdown is possible.
Secretary Kennedy Announces $100 Million for Mental Health and Addiction Recovery
On February 2, Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. announced $100 million in funding to address homelessness, opioid addiction, and gaps in the behavioral health system. The new funding is part of the administration’s efforts to carry out a recent executive order signed by President Trump entitled “the Great American Recovery.”
What is the funding for?
The funding will support the new Safety Through Recovery, Engagement, and Evidence-based Treatment and Supports (STREETS) Initiative, which will provide targeted outreach, psychiatric care, medical stabilization, crisis intervention, and connections to long-term housing and recovery supports. The initiative aims to unify multiple services into a single continuum, with funding to be administered by SAMHSA and deployed in eight communities. HHS said they will pair this investment with a $10 million Assisted Outpatient Treatment (AOT) grant program. Faith-based organizations were called out specifically although it's not yet clear how that will be considered as funding proceeds.
Federal Rescissions Target Health and Transportation Funds in Four States
The White House Office of Management and Budget (OMB) has directed the rescission of $1.5 billion in federal funding from four Democrat-led states: California, Colorado, Illinois, and Minnesota. The cuts affect programs administered by both the Department of Transportation (DOT) and the Centers for Disease Control and Prevention (CDC). The decision follows earlier warnings that federal funding for "sanctuary jurisdictions" could be halted in February, and officials describe the targeted states as “fraught with waste and mismanagement.” State officials, however, are expected to challenge the rescissions in court as being unlawful and politically motivated.
What programs have been targeted?
DOT has been instructed to retract $943 million, largely from climate related transportation projects, including electric vehicle charger installations and green bus initiatives. The CDC must rescind $602 million in planned state and local health grants, which would have supported programs addressing HIV prevention, COVID-19 health disparities, and intimate partner violence research. The rescissions come amid broader efforts by the administration to roll back federal funding for climate-related projects and social programs in predominantly blue states, many of which are already engaged in ongoing legal disputes over prior funding freezes. More recently, on Friday, February 6, a New York judge extended an injunction blocking the administration from cutting childcare and family assistance funding from five Democrat-led states.
Congressional Scrutiny of Nonprofits Continues
The House Ways & Means Committee is set to hold a February 10 hearing titled “Foreign Influence in American Non-profits: Unmasking Threats from Beijing and Beyond.” The session is expected to mirror Chairman Jason Smith’s (R-MO) broader efforts to examine the nonprofit sector, including past allegations that some organizations may be facilitating improper or illegal activities. Witnesses include the leaders of Public Citizen and Americans for Public Trust.
What's the focus?
Shortly after announcing the hearing, Chairman Smith sent a letter to the National FFA Organization (formerly known as the Future Farmers of America) raising similar concerns. The letter questions the group’s diversity, equity, and inclusion (DEI) practices and suggests potential links to the Chinese Communist Party (CCP). While Ways & Means leadership has previously scrutinized other nonprofits over alleged CCP ties, this appears to be the first instance in which the Committee has simultaneously challenged an organization’s DEI efforts.
Relatedly in States
At least three states (Florida, Maryland, and New Hampshire) now have bills pending that would restrict state or local governments from funding nonprofits under certain conditions.
Federal Election Legislation (SAVE Act) Vote Expected Soon
To secure enough support for appropriations funding the federal government for the remainder of FY26, Speaker Mike Johnson (R‑LA) and the White House reached an agreement to bring the Safeguard American Voter Eligibility (SAVE) Act (H.R. 22) to votes in both chambers of Congress.
What is the Aim of the SAVE Act?
The proposal would require individuals to provide proof of citizenship when registering to vote in federal elections or updating existing registrations. It would also end automatic, same‑day, online, and mail‑in voter registration, among other changes. These provisions could affect nonprofits that conduct nonpartisan voter registration efforts. The House is expected to vote on the bill this week. Our Ask: if this legislation would impact your work or the people you serve, please contact your lawmakers to share your perspective.
Midterm Elections: What to Expect – Join Us on February 19 for Capitol Conversations
Join us for expert analysis with the Cook Political Report’s Carrie Dann to learn more about what is in play in the upcoming midterm elections, including the tightest House and Senate races, insights on redistricting efforts, and what it means for the nonprofit sector. Register now for this Special Edition of the Capitol Conversations webinar series on Thursday, February 19, at 1:00 pm ET.THIS WILL BE A LIVE-ONLY EVENT AND NOT RECORDED.
The discussion will feature:
Carrie Dann, Managing Editor, The Cook Political Report
The latest updates on Capitol Hill and beyond from Lutheran Services in America policy staff
NOTE: If you have already registered for an upcoming session, please note the updated registration link below. You must re-register using the new registration form for each individual session that you would like to attend.
For more information, please contact Sarah Dobson, Senior Director of Public Policy and Advocacy.
Lutheran Services in America is one of the nation’s largest national networks of health and human service providers with a mission to cultivate caring communities that advance health and opportunity for all. With 300 nonprofit organizations across 1,400 U.S. communities and more than $26 billion in combined annual services, the Lutheran Services in America network advances equitable outcomes for children, youth and families, improves independence and choice for older adults, champions meaningful services and support for people with intellectual and developmental disabilities, and strengthens stability and purpose for veterans and others. Formed in 1997, Lutheran Services in America brings together a network of leaders, partners and funders to catalyze innovation, strengthen organizational capacity and advance public policy.
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