Partial federal government shutdown: updates

Today is Day 3 of the partial government shutdown, impacting 78% of the federal discretionary budget.

All eyes are on the House as it prepares to vote as soon as tomorrow on a legislative package to reopen and fund key federal agencies. The legislative package provides full-year funding for five of the remaining spending bills, and it extends funding for two weeks for the U.S. Department of Homeland Security (DHS).

After House Democrats warned Speaker Johnson (R-LA) over the weekend that they would withhold the votes needed to fast-track the spending package, House Republicans are meeting today to discuss their strategy for moving forward. Speaker Johnson is facing increased pressure to keep his razor-thin majority aligned, despite disagreement among conservatives about whether to support the legislation, or whether to push for their own changes. President Trump has endorsed the legislative package and is urging House members to get on board. Some House Republicans, however, want to attach a bill to require proof of citizenship when registering to vote in federal elections. If the House makes any changes, the legislative package would need to go back to the Senate for another vote before it could be passed into law, effectively ending the shutdown.

The House Rules Committee is expected to meet this afternoon at 4pm ET to tee up the vote for tomorrow. The Rules Committee will provide us with an early glimpse in whether there may be additional delays in enacting the legislative package. NCN will continue to monitor any developments.

Overall, there is a strong desire to keep this partial shutdown as short-term as possible. Right now, the impact on federal agencies is minimal, but if the shutdown continues into next week, it could start to hurt TSA workers, air traffic controllers, Headstart programs, and more.

After Congress reopens the government, it will have two weeks to contend with demands by Democrats to make changes to ICE operations. If Congress and the White House cannot reach a deal over ICE policy, we could see DHS shut down starting on February 14 (though ICE and CBP operations would continue due to supplemental funding enacted in the One Big Beautiful Bill Act last year).

Parts of the federal government shutdown yesterday morning after Congress and the White House failed to pass into law the spending bills needed to keep major federal agencies funded and open. The soonest the federal government could reopen is Tuesday.

The partial shutdown, which impacts 78% of the federal discretionary budget, could be short-lived. The Senate voted to approve a legislative package late Friday night to provide full-year funding for five federal spending bills and to extend temporary funding for the U.S. Department of Homeland Security (DHS) for another two weeks. The short-term continuing resolution gives lawmakers additional time to negotiate policy changes to U.S. Immigration and Customs Enforcement (ICE) operations, following the killing of a second person in Minnesota by federal agents.

The spending package now heads to the House for a vote as soon as Tuesday. The timeline slipped a day after Minority Leader Jeffries (D-NY) informed Speaker Johnson (R-LA) that House Democrats would not support efforts to fast-track the measure because it includes funding for DHS without any reforms. House leaders must now garner support from virtually every House Republican in order to pass the legislation, including those who have already raised objections. Some conservative House members, for example, want to attach legislation to the spending package that would require proof of U.S. citizenship to register to vote in federal elections.

A partial government shutdown over the weekend is guaranteed, as federal funding runs out tonight at midnight. After some delays, Congress is on track to enact a spending package as soon as early next week to reopen and fund the government, potentially limiting the harm caused by a partial shutdown on nonprofits and the communities they serve.

The White House and Senate Democrats reached an agreement yesterday to advance five full-year spending bills, paired with a two-week extension of funding for the U.S. Department of Homeland Security (DHS) as lawmakers continue to negotiate policy changes to ICE operations. Despite the agreement, votes on the spending package stalled late last night after Senator Graham (R-SC) withheld his support. After several hours of delay, Graham has now signaled that he is willing to let the spending package advance so long as the Senate holds a vote on legislation on sanctuary cities and other priorities – legislation that could have a significant, harmful impact on nonprofits in those jurisdictions.

The Senate is slated to vote on the spending package later today. An exact time for voting has not been announced, but approval is expected. After the spending package passes the Senate, the House will vote on the measure as soon as Monday when Representatives return from recess. 

This guarantees at least a short-lived partial shutdown impacting 78% of the federal discretionary budget over the weekend. If the House approves the measure early next week, however, the impacts of the partial shutdown are expected to be limited. Federal agencies will release starting today contingency plans outlining which federal employees will be instructed to stop working, and which are deemed “essential” and must continue their work.

The White House and Senate Democrats announced tonight an agreement to remove the U.S. Department of Homeland Security (DHS) spending bill from the legislative package working its way through Congress, and to instead enact the remaining five full-year spending bills that already passed the House. This includes full-year funding for Labor-Health and Human Services-Education, Transportation-Housing and Urban Development, Defense, State-Foreign Operations, and Financial Services.

Under the agreement, DHS would be funded through a two-week continuing resolution (CR) to give policymakers more time to negotiate over policy changes to Immigration and Customs Enforcement (ICE). Democratic lawmakers are demanding changes to tighten rules on warrants, mandate independent investigations, prohibit masks and require body cameras for DHS agents.

Senate leaders want to quickly enact the compromise, possibly as soon as tonight. Once the revised package passes the Senate, it must return to the House for another vote. The House is not slated to return to session until Monday, but it is possible that Speaker Johnson may call members back to DC over the weekend. Congressional leaders are hoping the President can put some pressure on House members to support the package.

While a partial shutdown is likely, it is possible that it could be very short-lived, with resolution by the weekend or early next week.

Federal Funding
Congress is making progress on spending bills, but the congressional calendar is adding some challenges. Next week, the Senate is out of session. When they return the last week of the month, the House will be on recess. This gives congressional leaders a narrow path to enacting all the spendings they need before the current Continuing Resolution (CR) expires on January 30 when Congress must either enact its remaining full-year spending bills or another CR, or it risks a government shutdown.

There are four remaining spending bills to contend with: Defense, Transportation-HUD (THUD), Labor-HHS-Education (LHHS) and Homeland Security. We are expecting the Appropriations Committees to release legislative text over the weekend for three of these spending bills (Defense, THUD, and LHHS). The goal is to take up and vote on these bills in the House next week in order to tee them up for the Senate when they return from recess the last week of January.

The biggest open question is related to Homeland Security funding. Some Democrats are pushing for reforms to U.S. Immigration and Customs Enforcement ICA) in the funding bill, and it is unclear whether congressional leaders can reach a bipartisan deal. If they cannot, they may try to enact a CR for Homeland Security funding.

Congressional Hearing
Next Wednesday, the House Judiciary Subcommittee on Crime and Federal Government Surveillance will hold a hearing on “When Public Funds Are Abused: Addressing Fraud and the Theft of Taxpayer Dollars.” The hearing will focus on how “fraud schemes have exploited multiple federally funded programs in Minnesota and wasted billions in American taxpayer dollars” and “the need for enhanced investigation, enforcement, and prosecution to ensure offenders are held accountable.” Nick Shirley, the YouTuber who alleged fraud among Somali-run childcare centers will testify. NCN will monitor this closely for any possible impacts on nonprofit grantees/contractors. 

The House Judiciary Committee will hold a hearing on Feb. 11 with Attorney General Pam Bondi. NCN will monitor this hearing for any new information related to DOJ investigations into nonprofits.

Anti-Fraud Legislation
The Senate DOGE Caucus, led by Senator Ernst (R-IA), is meeting today to put together a legislative package to target fraud in federal programs. The legislative package is a response to alleged fraud in Minnesota, but it could impact nonprofits nationally. NCN is tracking this and will keep you updated with any developments.