Status of FY 2026 Funding: Government Shutdown!
The federal government shut down this week, and it will impact all agencies and programs that rely on annual appropriations because Congress has not yet enacted any of the twelve FY 2026 spending bills. During a shutdown, federal agencies must discontinue all non-essential discretionary functions paid for by annual appropriations until new legislation is enacted to provide funding. Government services essential to protecting life and property (e.g., military operations, law enforcement, and air traffic control), mandatory spending programs (e.g., Social Security, Medicare, and Medicaid benefits), and programs funded outside of annual appropriations (e.g., the Federal Reserve, Amtrak, and the U.S. Postal Service) continue.
The president must continue to perform his constitutional responsibilities. High ranking administration officials also continue to work. Members of Congress continue to receive pay under the 27th Amendment to the Constitution. Congressional office decide which of their staffers to furlough. Each federal agency develops its own lapse in funding plan, following guidance released in previous shutdowns and coordinated by the White House Office of Management and Budget (OMB). Those plans identify the agency’s essential activities. Government employees necessary to such activities will continue to work; all other employees are furloughed.
No federal government employee receives a paycheck during the shutdown, even those required to work. But legislation enacted in 2019 mandates that all government employees will receive back pay once the government reopens (whether they worked or were furloughed). Historically, federal contractors are not compensated for payments not made to them by the government during a shutdown. Last week, OMB issued a memorandum regarding this possible shutdown. The document orders agencies to submit their lapse plans to OMB, and urges that they should consider including plans to permanently fire (rather than just furlough) government employees working in support of programs, projects, or activities that satisfy the following conditions: discretionary funding lapses on October 1 and another source of funding (e.g., funding included in the recently-passed One Big Beautiful Bill Act) is not currently available. The memorandum suggests that when the government reopens, the administration will hire back the smallest number of statutorily required employees at programs it does not support.