State-federal legislation news and updates from NCSL.

June 16, 2026

This week: The Office of Management and Budget proposes binding regulation on the flow and administration of federal funds, the Centers for Medicare and Medicaid Services issues interim final rule on work requirements for Medicaid recipients and a federal court overturns the administration’s H1-B visa fee increase and more. 

The Office of Management and Budget, joined by more than 40 federal agencies, published a proposed rule that represents the most significant rewrite of federal financial assistance policy since the office established the Uniform Guidance framework in 2013. The proposal, published on May 29, touches nearly every category of federal financial assistance—grants, cooperative agreements, pass-through awards, etc.—that flows to the states in areas including transportation, housing, public health, education and human services. Unlike the current guidance, the proposed regulations would carry the force of law and apply uniformly across agencies without separate agency-by-agency adoption.

The proposal seeks to substantially expand federal agencies’ authority over awards once they are made, granting broader discretion to monitor compliance, attach new conditions and suspend or terminate funding that no longer aligns with agency priorities. The rule would require senior political appointee review of discretionary awards, treat peer-review recommendations as advisory rather than binding, eliminate lump-sum awards in favor of cost-reimbursable structures, and place new emphasis on nondiscrimination compliance across funded activities and subrecipients.

For state governments—which receive federal grants directly and administer pass-through awards to thousands of local subrecipients—the proposed rule creates layered obligations and risks that touch virtually every program area. Moreover, the proposal limits flexibility for states and mandates federal oversight of state audit and evaluation processes. The rule would take effect Oct. 1 and apply to all fiscal year 2027 awards, a compressed timeline that may not align with states’ own rulemaking, regulatory and appropriations processes, many of which require legislative action to update. The proposed rule is open for public comment through July 13.

► Regulation for Federal Financial Assistance (Federal Register)

► Federal Reforms to Grants and Assistance Regulation: What States Should Know (NCSL)

Treasury Department Previews Regulations for Federal Scholarship Tax Credit | Treasury officials recently previewed proposed regulations for a program allowing individuals to receive a dollar-for-dollar tax credit of up to $1,700 for donations to qualifying scholarship granting organizations. The preview also includes information on fraud prevention, the 90% income rule, multistate SGOs, the definition of “school” and verifying student eligibility. The program, established by the One Big Beautiful Bill Act, goes into effect in 2027. Program regulations will be released by the end of September.

►Press Release (Department of the Treasury)

►Preview of Forthcoming Section 25F Guidance (Department of the Treasury)

CMS Issues Interim Rule on Medicaid Work Requirements | The interim final rule requires Medicaid recipients ages 19-64 to complete 80 hours per month of work or related activities, such as employment, education or community service as a condition of eligibility. The rule exempts pregnant or postpartum individuals, caregivers and people with disabilities or who are medically frail. States are required to implement the policy by Jan. 1, 2027. Comments are due July 31.

 ►Medicaid Program; Community Engagement Requirement for Certain Individuals (Federal Register)

 ►Medicaid Road Ahead: Policy Options and Budget Impacts | Webinar Series (NCSL)

 ►Medicaid Work Requirements Spark Debate as States Prepare for Federal Changes  (NCSL)

 ►State Legislatures Navigated Evolving Medicaid Policy in 2025 (NCSL)

Federal Judge Strikes Down Increased H-1B Fee Requirement | The administration issued its proclamation requiring sponsoring employers to pay a $100,000 fee for all new H1-B visa applications in September 2025. Previously, visa fees ranged from $2,000 to $5,000. In his opinion, U.S. District Judge Leo Sorokin ruled the fee violated the Administrative Procedure Act, writing “the court finds that the policy imposes a tax on H-1B petitions without the requisite delegation by Congress.”

►Sorokin Opinion (U.S. District Court District of Massachusetts)

►Restriction on Entry of Certain Nonimmigrant Workers (White House)

ICE and CBP Funded Through FY 2029 | Last week, President Donald Trump signed a bill providing nearly $70 billion to Immigration and Customs Enforcement and the Border Patrol through September 2029. Parting from the traditional appropriations process, the Secure America Act funds the two agencies through a reconciliation bill for activities including hiring and training, acquiring advanced technology and performing investigations. The bill increased funding for the 287(g) agreements that deputize state and local authorities to perform federal immigration enforcement, and it included $109 million for hiring and training law enforcement personnel to combat child exploitation.

►Homeland Security Appropriations Bill, 2027 (House Appropriations Committee)

►S 2 Secure America Act (U.S. Senate)

► Secure America Act (White House)

Virtual Events

June 23 | From Scratch to Strategy: Building Cost Effectiveness Capacity and Measuring External Impact

June 24 | Town Hall: Workforce Pell Grants

June 26 | Expert Testimony: The Role of Trial Judges

July 9 | What's the Latest on Redistricting?

In-Person Meetings

Jul 27-29 | NCSL Legislative Summit, Chicago

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About Capitol to Capitol
Capitol to Capitol was established in 1994 to provide up-to-date information on important federal legislation. NCSL is committed to enhancing the role of states and state legislatures in the federal system.

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