External Threats to the State Budget and Education Spending

How does federal funding affect Delaware?

States and the services they provide rely heavily on the federal government for funds. While a great deal of money flows to states through direct payments, one of the biggest ways that states rely on the federal government is funding that goes to national assistance programs. Delawareans access federal assistance programs every day, from Medicaid payments to hospitals to parents buying food through the Supplemental Nutrition Assistance Program (SNAP). When the federal government reduces program funding or changes eligibility rules for these programs, people lose access to essential benefits and states have to spend more to fill the gap. Delaware’s budget is facing serious challenges as the result of federal budget and tax changes, especially due to changes to Medicaid, SNAP, Head Start, and federal tax structures.

Healthcare Decreases Under One Big Beautiful Bill

In 2025, Congress passed the One Big Beautiful Bill (OBBB), a bill which contained hundreds of changes to federal tax and assistance programs, including Medicaid and the Affordable Care Act (ACA). One major part of the bill that gained national attention allowed the ACA subsidies that help people afford insurance to expire. This provision went into effect in December of 2025, and as a result, fewer Delawareans will be able to afford coverage, which means healthcare centers will see less funding and fewer people enrolled. These impacts are nationwide: projections last year predicted that around five million people would be uninsured as a result of losing ACA coverage by December of 2026. Analysis by the Center on Budget and Policy Priorities has since found that by June of this year, only six months since the credits expired, five million people had lost marketplace insurance, with that number continuing to climb as premiums continue to rise. In June of 2025, Delaware was projected to lose around 12,000 ACA enrollees in 2026. The most recent data, collected in February of this year, found that already two months into the expiration of the ACA credits, enrollment in Delaware had already decreased by nearly 5,500 people.

This loss also impacts those who still have insurance coverage. The loss of additional subsidies is projected to increase how much marketplace enrollees must pay. The Congressional Research Service’s analysis of the OBBB estimates that the end of the credits will increase premiums by 7.7 percent in 2027. In the short term, these increased prices are predicted to hit Delaware’s economy hard, cutting an estimated $73 million in Delaware’s GDP from 2025-2026. Over the next two years, the costs will continue to grow. Delaware is predicted to lose around 3,400 jobs and $450 million in state GDP by 2029, as well as $27 million in local tax revenue.

Federal changes are also coming to Medicaid. It’s been projected that around 32,000 Delawareans to lose access to Medicaid benefits or see those benefits reduced, according to the Kaiser Family Foundation. This will have severe impacts, especially on families – around 37 percent of Medicaid enrollees in Delaware are children, and 43 percent of births in Delaware are covered by Medicaid. While the majority of the changes are likely to impact enrollees beginning in 2027, already five million people nationally and around 10,000 Delawareans have lost coverage between June 2025 and June 2026.

SNAP Changes to Leave up to 37,000 Delawareans Without Affordable Food

Under the OBBB, SNAP has changed both who are eligible for support, as well as how much of the program cost that is covered by the federal government. About 118,800 Delawareans received SNAP benefits from 2024-2025, totaling around 11 percent of the population of Delaware. Of those enrolled in SNAP, around half are families with children. Under the new federal funding model, states would take on more of the cost for SNAP. The Center for American Progress estimates that Delaware would need to spend $38 million to maintain the program without any cuts, as well as a required increase of $10.1 million in administrative costs beginning in Fiscal Year 2027. This expense would likely lead to budget cuts that would reduce services offered to residents in need of affordable food.

In addition to budget cuts, there have also been significant changes to how Delawareans enroll in SNAP and how they remain eligible for the program. More than 13,000 Delawareans will be at risk of losing access to their SNAP benefits due to these increased new administrative requirements, which potentially impact up to 37,000 Delawareans in some way when combined with the impacts of the budget cuts. Last November, Delaware issued a state of emergency in response to the federal freeze on SNAP benefits, where legislators and the YMCA worked to fill the gaps during the short-term shutdown; however, the impacts of long-term SNAP cuts will fall hardest on families who are struggling financially. Families that are eligible for SNAP are not only facing challenges paying for groceries, but are also facing increasing rents, utility bills, and more. These families will be hit hardest, as the loss of affordable food will cut into family budgets.

Cutting the Department of Education to Impact School Funding, Civil Rights

Education in Delaware is facing significant challenges as federal efforts to dismantle the Department of Education are reshaping how funding and students’ civil rights are handled nationwide. In the 2023-2024 fiscal year, around 10 percent of Delaware’s education funding came from federal sources, bringing around $335.5 million to the First State. Cuts to federal funding or delays resulting from the Department’s dismantling will not be distributed evenly. Several districts in Delaware rely heavily on federal funds, putting them at significant risks of budget cuts if they lose federal funds.

The distribution of funds is most likely to be disrupted through federally mandated programs, namely the Individuals with Disabilities Education Act (IDEA) and Title 1, which directs funding to low-income students. Transforming these programs into block grants or changing the agency responsible for their administration is predicted to lead to tens of thousands of jobs lost and loss of access to vital educational support for students with disabilities.

Proposed Rules to Radically Alter Head Start Programs

In August, the Administration of Children and Families released a Notice of Proposed Rulemaking (NPRM) that laid out the changes to the agency’s rules for how Head Start early learning programs can be run. The NPRM proposes sweeping changes to nearly every rule and regulation, cutting the vast majority of requirements for programs, and reducing federal regulations of Head Start down to only around a dozen pages. This mass deregulation reorganizes nearly every part of Head Start, and risks leaving vulnerable and high-need families without reliable early education.

Under the proposed rules, Head Start programs would no longer be able to reduce a family’s gross income to meet eligibility requirements if housing costs account for more than 30 percent of their gross annual income. This will cut eligibility for many families who may make more than the cutoff to be eligible but are still struggling with high rents or cost of living. Enrollment is also likely to be reduced by changes to how eligibility is determined. Families would no longer be able to self-attest for their status as homeless or low-income, or for proving a child’s age, which the Administration of Children and Families predicts will nationally cause around eight percent of currently enrolled children to be unenrolled if no documentation is submitted.

The instruction and staffing requirements of Head Start are also changing dramatically. Programs are now only required to serve children for a minimum of three hours, likely leading to cuts to class time for programs with smaller budgets. For administrative and support staff, all qualification requirements are being removed, the Agency arguing that cutting requirements will allow programs to save money by offering workers a lower salary. This cuts the requirements for Head Start directors, fiscal officers, family/health/disability managers, family childcare workers, family service workers, and home visitors. Immigrant and multilingual communities will face additional hurdles, as the rules require that all instruction must be conducted in English only. While this rule may not directly cut enrollment, it is projected to reduce jobs across the Head Start organization, pressure multilingual learners to withdraw from the programs, and create more barriers for immigrant and multilingual communities seeking early education for their children.

What the Future Holds for Delaware

The federal government provides more than direct payments to school districts or grants to state organizations. Cuts or changes to SNAP, Medicaid, and Head Start, will impact students, families, and communities in profound ways. Families will lose access to early education, healthcare, or food assistance, while some will lose access to all three at once. The changes to the ways in which programs determine eligibility are intended to push residents in Delaware and around the country off federal programs, leaving the state with the difficult choice of balancing other budget priorities against providing families with the essentials to survive.

As Delaware’s early childhood education programs like Purchase of Care and state-sponsored pre-K support are discretionary in the budget, they are at particular risk of being cut to help cover the gaps left by federal spending cuts. Given that the OBBB is projected to cause a $410 million shortfall in revenue for Delaware, the General Assembly recently passed bill HB255, which ‘decouples’ the state from the OBBB by adjusting the timing on the tax breaks, spreading out their impacts to reduce the impact of the federal tax adjustments. Even with these measures, the impacts will continue to ripple outwards, disrupting lives across the state and reducing the ability of Delaware’s legislature and Governor to fund essential programs.

Citations

1. “2024 Public Elementary-Secondary Education Finance Data.” S. Census Bureau. Last updated May 7, 2026. https://www.census.gov/data/tables/2024/econ/school-finances/secondary-education-finance.html.
2. “2025 Delaware Public Education At-A-Glance.” Rodel. May 2025. https://rodelde.org/wp-content/uploads/2025/05/PO-9022_Rodel-At-a-Glance-Update-2025-FINAL.pdf.
3. Burns, Alice, Jared Ortaliza, Justin Lo, Matthew Rae, and Cynthia Cox. “How Will the 2025 Reconciliation Law Affect the Uninsured Rate in Each State?” Kaiser Family Foundation. Updated August 20, 2025. Last accessed August 19, 2026. https://www.kff.org/uninsured/how-will-the-2025-reconciliation-law-affect-the-uninsured-rate-in-each-state/.
4. Center on Budget and Policy Priorities. “Health Coverage Tracker: Millions of People Are Losing Coverage Following 2025 Republican Policy Changes.” Last updated September 29, 2026. https://www.cbpp.org/research/health/health-coverage-tracker-millions-of-people-are-losing-coverage-following-2025.
5. gov. “Enhanced Premium Tax Credit and 2026 Exchange Premiums: Frequently Asked Questions.” September 16, 2026. https://www.congress.gov/crs-product/R48290.
6. Delaware Legislative Black Caucus. “Lawmakers Team Up with YMCA of Delaware and Other Community Partners Amid SNAP Benefit Crisis.” November 6, 2025. https://dlbc.delaware.gov/2025/11/06/lawmakers-team-up-with-ymca-of-delaware-and-other-community-partners-amid-snap-benefit-crisis/.
7. “Food Bank of Delaware, Community Partners Gather at Legislative Hall to Highlight Impact of Rising Costs.” Food Bank of Delaware. May 20, 2026. https://www.fbd.org/food-bank-of-delaware-community-partners-gather-at-legislative-hall-to-highlight-impact-of-rising-costs/.
8. “How Many People Receive SNAP Benefits in Delaware Every Month?” USAFacts. Updated June 5, 2026. https://usafacts.org/answers/how-many-people-receive-snap-benefits-in-the-us-every-month/state/delaware/.
9. Khalique, Amina, Kennedy Andara, Natalie Baker, Sara Partridge, and Kyle Ross. “The Trump Administration’s One Big Beautiful Bill Act Will Drive Up Costs in Delaware.” Center for American Progress. August 6, 2025. https://www.americanprogress.org/wp-content/uploads/sites/2/2025/08/OBBBAfamilies-DE.pdf.
10. Ku, Leighton, Taylor Gorak, Kendal Orgera, Kristine Namhee Kwon, Maddie Krips, and Joseph J. Cordes. “Expiring ACA Premium Tax Credits Could Lead to Nearly 340,000 Jobs Lost Across the U.S. in 2026.” The Commonwealth Fund. October 16, 2025. https://doi.org/10.26099/dhxk-qf82.
11. Ku, Leighton, et al. “How Medicaid and SNAP Cutbacks in the “One Big Beautiful Bill” Would Trigger Big and Bigger Job Losses Across States.” Commonwealth Fund. June 2025. https://doi.org/10.26099/tryd-ht51.
12. Mueller, Sarah. “Delaware House Passes Legislation Aimed at Shrinking Impact of Federal Tax Breaks on State Budget.” WHYY, November 14, 2025. https://whyy.org/articles/delaware-house-federal-tax-break-budget-legislation/.
13. NHSA NPRM Short Summary. National Head Start Association. Last updated August 17, 2026. Last accessed August 19, 2026. https://nhsa.app.box.com/s/7dgwks9pxh8ik9wbumsjglz7ywjcf4k6.
14. “What percentage of public school funding in Delaware comes from the federal government?” USAFacts. Updated April 24, 2026. https://usafacts.org/answers/what-percentage-of-public-school-funding-comes-from-the-federal-government/state/delaware/.
15. “Why is the Food Bank Weighing in on SNAP, Medicaid Cuts?” Food Bank of Delaware. August 22, 2025. https://www.fbd.org/why-is-the-food-bank-weighing-in-on-snap-medicaid-cuts/.
16. Walker, Tim. “How Dismantling the Department of Education Would Harm Students.” National Education Association. Published February 4, 2025, last updated November 18, 2025. https://www.nea.org/nea-today/all-news-articles/how-dismantling-department-education-would-harm-students.

Related Topics: Delaware education, delaware schools, Secretary of Education, US Department of Education