Montana Schools to Receive Federal Funding Through Labor Department in Major K-12 Grant Restructuring

HELENA — Montana school districts will see a major shift in how they receive federal education funding, with the U.S. Department of Labor now taking over administration of billions of dollars in K-12 grant programs previously managed by the Department of Education.

The Montana Office of Public Instruction assured educators Tuesday that the restructuring will not affect local funding or policies, though state officials acknowledged many details remain unclear as the federal government works out the transition.

“I want to assure you that this new IAA will not impact local district policies, programs, or funding,” Superintendent Susie Hedalen wrote in a Thanksgiving message to Montana educators. “Details are still being worked out by the federal government and I will continue providing information as I receive it.”

What’s Changing

The U.S. Department of Education announced last week^1 it is establishing six new interagency partnerships to “break up the federal education bureaucracy,” according to Education Secretary Linda McMahon.

Under the Elementary and Secondary Education Partnership, the Department of Labor will now manage competitions, provide technical assistance, and oversee grant programs that were previously handled by the Education Department’s Office of Elementary and Secondary Education.

The affected programs include:

Major formula grants:

• Title I, Part A — the largest federal education program, providing supplemental funding to schools serving low-income students
• Title II — grants supporting teacher quality and professional development
• Title III — English language acquisition programs
• Title IV — student support, academic enrichment, and 21st Century Community Learning Centers
• Title V — rural school programs
• Impact Aid — compensation for schools affected by federal activities
• Education for Homeless Children and Youths

Competitive grants:

• Charter Schools Program
• Comprehensive Literacy State Development
• Magnet Schools Assistance Program
• Promise Neighborhoods
• Arts education assistance
• Teacher and school leader incentive programs
• American History and Civics grants

The Federal Rationale

The Trump administration frames the restructuring as workforce alignment and a return of authority to states.

“The Labor Department is committed to working with the Department of Education to ensure our K-12 and postsecondary education programs prepare students for today and tomorrow’s workforce demands,” Labor Secretary Lori Chavez-DeRemer said in the federal announcement.

The partnership uses an interagency agreement under the Economy Act, which allows federal agencies to contract with each other for services. According to the Education Department, the Labor Department will provide “grant administration services” while the Education Department maintains statutory oversight responsibilities.

Federal officials said the restructuring aims to create “a cohesive, unified strategy for talent development” by connecting K-12 programs with the Labor Department’s existing employment and training programs.

What It Means for Montana

Montana school districts currently receive millions of dollars annually through the affected programs. Title I alone provided more than $40 million to Montana schools in recent years to support students from low-income families.

According to the federal fact sheet^2, states will continue receiving all formula funds but “will now receive these funds from DOL” instead of the Education Department. The document states there is “no anticipated adverse impact on eligible agencies, entities, and institutions.”

School districts are advised to continue working with their existing federal program contacts. “States and grantees should continue to remain in contact with their respective OESE and DOL programmatic staff,” according to the federal guidance.

Hedalen said Montana OPI will continue leading federal programs at the state level. “OPI continues to lead federal programs under OESE in the state and we believe the only impact will be that our federal contacts might simply be changed or expanded due to this new IAA,” she wrote.

Precedent and Timeline

Interagency agreements are commonly used across federal agencies, according to the Education Department. The Biden administration used a similar arrangement in 2022 when the Justice Department designated the Labor Department to administer grants under the First Step Act.

More recently, the Education and Labor departments successfully implemented an interagency agreement in October to streamline adult education and career and technical education programs. According to the federal fact sheet, that partnership has processed nearly 500 payment requests from 35 grantees since October 1.

The Elementary and Secondary Education Partnership also affects postsecondary programs and establishes partnerships between the Education Department and the departments of Interior, Health and Human Services, and State for other education initiatives.

Federal officials have not announced a specific timeline for the transition of K-12 program administration to the Labor Department.