Budget reconciliation passes in the House
On May 16, the House Budget Committee reviewed a new budget plan but initially failed to pass it. Two days later, it passed narrowly, 17-16, with five Republicans voting “present.”
Named H.R. 1: “The One Big Beautiful Bill Act,” the measure then cleared the House Rules Committee after a 22-hour session. On May 22, it passed in the House by a 215-214 vote. This legislation extends President Trump’s 2017 tax cuts, increases defense spending, cuts Medicaid, and includes many other provisions in its 1,000+ pages.
The budget reconciliation process now lies in the Senate, where members are aiming to pass the measure by July 4. The Senate will likely make various changes to the legislation, specifically around Medicaid and the State and Local Tax (SALT) Cap.
On June 4, members of the Senate Finance Committee met with President Trump to discuss changes to the bill following the release of the Congressional Budget Office’s (CBO) cost estimate for the measure. The CBO stated that the bill would cost $2.4 trillion over the course of 10 years and result in around 11 million people losing health insurance.
President Trump releases full budget request
The Trump Administration released its FY26 budget proposal on May 30, outlining significant proposed reductions across education, research, and public health funding. The Department of Education is proposed to face a 15% cut, with elimination of several higher education programs such as GEAR UP, TRIO, and federal teacher preparation and childcare grants. Student aid programs would also see reductions, including a lower maximum Pell Grant and elimination of Supplemental Educational Opportunity Grants and Federal Work-Study.
Federal research funding is also targeted for cuts. The National Science Foundation (NSF) is proposed to receive $5 billion less in funding, with steep reductions in research areas including geosciences, mathematics and physics, and education research. Additionally, the budget suggests capping indirect cost recovery on federal research grants at 15%, a change that could affect university research budgets.
The budget proposes a 26% cut in discretionary funding for the Department of Health and Human Services, reducing its budget to $94.7 billion. This includes proposed cuts to agencies such as the NIH, CDC, and SAMHSA, as well as elimination or consolidation of several programs.
Congress holds constitutional authority over federal spending and will ultimately determine FY26 funding levels through the appropriations process.
FY26 budget appropriations
The week of June 2, the House Appropriations Committee officially began its FY26 appropriations process, following the release of President Trump’s full budget request . Congress must pass 12 individual appropriations bills, each originating in the relevant subcommittees.
Administration officials continued their appearances before Congress to discuss the budget and agency priorities, including Secretary of Commerce Howard Lutnick, Office of Management and Budget (OMB) Director Russ Vought, and Education Secretary Linda McMahon.
The remaining House subcommittees will continue markups in the coming weeks. UNC Public Affairs will be watching for updates on high-profile bills such as Defense, Labor-HHS-Education, and Energy & Water.
Agency actions on capping indirect costs
The NIH, NSF, Department of Energy (DOE), and Department of Defense (DOD) have taken action on facilities and administrative (F&A) costs.
- NIH: On February 7, NIH issued guidance implementing a 15% cap on indirect costs for all new and existing grants. This policy was challenged in court, and on April 1, a federal judge ruled that the NIH policy was “arbitrary and capricious,” blocking its implementation due to insufficient rationale and failure to follow required procedures under the Administrative Procedure Act.
- NSF:Â Effective May 5, NSF announced a standard indirect cost rate not to exceed 15% for all grants and cooperative agreements awarded to institutions of higher education. Following legal challenges, NSF agreed to pause the implementation of this policy pending a court hearing scheduled for June 13, 2025. In the meantime, NSF has reverted to issuing awards based on institutions’ existing negotiated rates.
- DOE: On April 11, DOE announced a policy capping indirect cost rates at 15% for all new research grants to colleges and universities. This prompted legal action, and on May 15, a federal judge issued a nationwide preliminary injunction halting implementation, citing concerns over the sudden policy shift and its potential impact on critical research.
- DOD:Â On May 14, DOD issued a memorandum stating its intent to cap indirect cost rates at 15% for all new financial assistance awards to institutions of higher education. This policy is scheduled to take effect 21 days from the date of the announcement.
In response to these proposed caps, the Association of American Universities, the Association of Public and Land-Grant Universities, and the American Council on Education, along with several institutions, have filed lawsuits challenging the legality of the NIH, NSF, and DOE indirect cost cap policies. These associations argue that the caps threaten the sustainability of research infrastructure and violate federal rulemaking procedures.
Senate HELP Committee hosts HHS secretary
On May 14, Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. spoke at the Senate Health, Education, Labor, and Pensions (HELP) Committee in a hearing entitled, “Hearing on Fiscal Year 2026 Department of Health and Human Services Budget.”
This was Kennedy’s first time testifying in Congress since his confirmation at the beginning of the year. In the hearing, a prominent topic was the mass layoffs and agency reorganization that has been taking place under Kennedy’s leadership. Over 10,000 people have been laid off, and the department plans to continue those cuts.
Throughout the hearing, Kennedy asserted that vital functions at HHS have not been harmed, and the department is being streamlined. Other topics discussed throughout the hearing included NIH indirect cost cuts, canceled grants, vaccines, drug prices, and the budget request. Watch the full hearing here.
NSF calls for numerous changes
As reported by Science, the NSF is undergoing drastic changes within the agency including restructuring the organization and transforming its grant process. These changes aim to shrink the agency and refocus NSF’s priorities, concentrating on fields that have more economic benefits rather than basic research endeavors.
These moves include:
- abolishing the current 37 divisions and restructuring them into five clusters focused on artificial intelligence, quantum information science, biotechnology, nuclear energy, and translation science;
- reducing the number of temporary employees from 368 to 70;
- lessening the number of senior executive service members from 143 to 59 through methods such as demotions, removal of positions, and reduction in forces; and
- cancelling over 1,400 grants and awards, and sunsetting the Division for Equity for Excellence in STEM by removing all employees within the division in the next 60 days.
These changes connect to President Trump’s desire to shrink the agency’s budget by 55% for FY26. Many of these actions may be slowed due to legal suits and current temporary restraining orders that are pausing agency reductions across the government.
Sen. Tillis champions NIH funding in FY26 appropriations letter
Sen. Thom Tillis (R-NC) is co-leading a bipartisan “Dear Colleague Letter” with Sen. Alex Padilla (D-CA) urging strong federal support for the NIH in FY26. As a leading research university with more than $500 million in annual NIH funding, Carolina greatly values Sen. Tillis’s continued leadership in advancing biomedical research. UNC Federal Affairs is working with national associations to encourage additional Senate cosponsors. A draft of the letter can be viewed here.
President Trump issues executive order on gain of function research
On March 5, President Trump issued an executive order (EO) titled, “Improving the Safety and Security of Biological Research.”
As defined in the EO, gain-of-function research that is considered dangerous is “scientific research on an infectious agent or toxin with the potential to cause disease by enhancing its pathogenicity or increasing its transmissibility.” Some of the provisions within the EO include ending federal funding on gain-of-function research with countries of concern and increasing transparency and oversight.
Additionally, the order instructs the Office of Science and Technology Policy (OSTP) and other agencies to strengthen their independent oversight and increase accountability through measures such as audits. It also instructs OSTP and other agencies to establish a mechanism for publicly reporting gain-of-function research by federally funded institutions, whether the research is federally funded or not.