The US shutdown is hurting schools whose budgets are mostly federal money: Here's why Native students are paying the price

Financial distress caused by the ongoing US government shutdown is taking a heavy toll on schools that depend largely on federal funds to operate. In Chinle, Arizona, where nearly half of the Chinle Unified School District ’s budget comes from a single federal programme, after-school activities have been suspended, leaving students without vital support and daily meals.

While most US school districts rely primarily on local property taxes to fund education, those situated on Native American reservations or military bases face a very different challenge. Because federal land is not taxable, these communities depend on a federal funding stream known as Impact Aid . When the shutdown halted government operations, the flow of Impact Aid — worth about $1.6 billion annually — was frozen, pushing many districts into crisis.

Federal funds on hold
Impact Aid supports about 1,000 school districts across the US, serving nearly eight million students. Unlike other federal education programmes that disburse funds before the academic year begins, Impact Aid payments typically start in October. The current shutdown has delayed those payments indefinitely, forcing some districts to rely on reserve funds while others weigh borrowing options.

Chinle Unified School District, which spans 4,200 square miles in the heart of the Navajo Nation, receives around $30 million a year through Impact Aid. The funds support full-day kindergarten, teacher salaries and essential school operations. Superintendent Quincy Natay said construction projects and enrichment programmes have already been halted. “The kids maybe are going home and not eating, because these are the only three meals they may get in a day,” Natay said, quoted by the Associated Press.

Programmes cut and staff furloughed
The suspension of Impact Aid has also disrupted federal operations within the US Department of Education. Employees responsible for managing the funding programme have been furloughed, and some positions were marked for elimination, adding further uncertainty for districts that depend on assistance. Several Democratic members of Congress from Arizona urged the department to reverse the layoffs, writing that they were “deeply troubled” by the decision and warning of “irreparable harm” to schools, according to the Associated Press.

A federal judge later blocked all layoffs made by President Donald Trump’s administration during the shutdown, halting further job losses for now. However, education officials said the disruption had already affected the ability of districts to get timely answers about their funding status.

Schools brace for deeper cuts
In Texas, the Lackland Independent School District near San Antonio faces a similar struggle. Roughly half its funding comes from Impact Aid, which compensates for the presence of Lackland Air Force Base. Superintendent Burnie Roper said, quoted by the Associated Press, that the longer the shutdown lasts, “the more uncertainty schools face.”

In Montana, Rocky Boy School District is using its reserve fund to manage expenses, but officials warned that an unexpected cost, such as replacing a school boiler, could quickly drain their budget. “If I were to have a boiler go out in the middle of winter, well, that’s probably a $300,000 fix,” Superintendent Voyd St. Pierre said in conversation with the Associated Press.

Native districts face limited options
Impact Aid is recalculated annually based on factors such as federal land area and student enrolment, requiring districts to reapply each year. For schools on Native American reservations, the shutdown has exposed the fragility of their financial structure. Anne O’Brien, a spokeswoman for the National Association of Federally Impacted Schools, said in conversation with the Associated Press that without the Impact Aid staff in place, “there’s no one at the department to answer those questions.”

As the shutdown continues, districts like Chinle remain in limbo — uncertain when the funds will resume and how long they can sustain operations without them.