Government Relations Update — September 2026: Funding Forecast, AI Legislation, and the Midterm Elections

By Samuel Burns - Internet2 Senior Policy Advisor

The Status of Federal Science Funding in FY2027

Key Takeaways

• Congress passed a continuing resolution (CR) which was signed into law on September 2, 2026.
• This legislation funds the federal government through December 11 at FY2026 spending levels.
• The CR contains a provision (Division A, Sec. 157) that prohibits the Office of Management and Budget (OMB) from implementing its planned revisions to federal grant-making rules that would have taken effect at the beginning of October.
• The CR maintains the prohibition on changes to indirect cost rates that Congress adopted for FY2026 funding for National Science Foundation (NSF) and other agencies.
• The CR gives effect to both provisions throughout its duration, but not past December 11, 2026. 

Why This Matters to You

The Deep Dive

Rather than engaging in the last-minute negotiations that have become increasingly common ahead of funding deadlines, both chambers of Congress elected to accept a CR weeks ahead of the end of the fiscal year. Leaders on Capitol Hill were eager to avoid the threat of a government shutdown in an election year; this swift resolution enabled many lawmakers to quickly shift focus to their re-election campaigns. The House has adjourned and will not be returning to Washington until after the midterms. The Senate is scheduled to remain in session through the end of September.

While Congress has provided funding stability through the next few months, many agencies still have billions of dollars of funding available that they are focused on obligating before the end of the fiscal year. Some agencies will also have carryover funding that will not expire on September 30, allowing them to continue advancing major initiatives going into the fall. Under the CR, agencies are allowed to continue to issue new funding solicitations and make awards with this funding, as long as it is not for new programs or activities.

Looking Ahead

The Senate has still not unveiled its proposed annual budget, and it is increasingly likely it will be delayed until after the midterms. The Senate is expected to reject the significant spending cuts called for in the Trump Administration’s FY2027 budget proposal from earlier this year, and will likely propose higher funding levels than those outlined in draft House legislation.

Meaningful progress on longer-term funding legislation is unlikely until after the midterms. It is likely that an additional CR will be necessary to extend funding beyond December 11, 2026.

Ultimately, the outcome of the elections will play a major role in determining the timing, structure, and overall direction of federal science funding for the remainder of FY2027 and beyond.

Signals from Capitol Hill on Federal AI Regulation

Key Takeaways

• There is growing public pressure for federal legislators to take action on AI regulation and a growing sense among lawmakers that bipartisan legislation is necessary.
• Congressman Jay Obernolte (R-CA-23) and Congresswoman Lori Trahan (D-MA-03) introduced the FRONTIER AI Act (opens in a new window) this summer, which has attracted attention among lawmakers in recent weeks.
  • The bill would create a third-party assessment process that would be embedded within frontier AI companies.
• Congressman Josh Gottheimer (D-NJ-05) recently announced (opens in a new window) two new bipartisan AI safety bills, the American AI Security Act, with Rep. Mike Lawler (R-NY-17), and the China FIREWALL Act, with Rep. Nick LaLota (R-NY-01).
  • The American AI Security Act would create a mandatory 30-day government review process, led by the National Security Agency, for advanced AI models ahead of their release. 
  • The China FIREWALL Act would ban the use of all Chinese-developed open-weight AI models on government-issued devices and would also prohibit federal agencies from procuring software that relies on those models.
• Near-term action on these and other bills is unlikely, but this will be a major focus on Capitol Hill after the midterms.

Why This Matters to You

The Deep Dive

Lawmakers are signaling that major action on AI will be a priority in the coming months. A wide range of proposals have already begun to circulate on Capitol Hill, with solutions ranging from voluntary guidelines to full hands-on reviews of models by federal agencies. While neither of the major political parties has articulated a clear vision for how the federal government should act to address public concerns about the potentially harmful impacts of frontier AI models, legislators are looking to work across party lines to ensure that swift action can be taken.

This provides a significant opportunity for members of the R&E community to share their advice, experience, and perspectives on how these tools are being utilized and what kind of support the community needs from the federal government to ensure a safe, secure, and productive AI-enabled working environment for researchers and educators. Members of Congress will be looking for input as they develop potential legislative solutions that may govern the development, adoption, and use of AI tools for years to come.

Much as they did following the proliferation of the internet, federal policymakers are approaching an inflection point at which new guidance, regulatory frameworks, and legislative action will be needed to address rapid technological change. Ensuring these policies reflect the needs of the R&E community will be a critical component of that effort.

Looking Ahead

Action on these priorities prior to the midterms is now off the table, as the House has adjourned weeks earlier than originally anticipated. Following the midterms, Congress will enter the so-called “lame duck” period where action on major new initiatives is unlikely. However, that time will be spent planning for the beginning of 2027 when newly elected legislators will be sworn in, and the new Congress will launch into a new cycle of high activity.

Midterm Election Forecast and What It Might Mean for R&E

Key Takeaways

• The focus in Washington has now shifted toward re-election campaigns and which party will hold control of the two chambers of Congress starting in January 2027.
• The House adjourned two weeks early, underscoring Speaker Mike Johnson’s view that additional time on the campaign trail will be critical for the most vulnerable members of his narrow majority. 
• The Senate will also adjourn soon to allow those running for re-election to return fully to the campaign trail.
• Current forecasts and polling suggest the House is very likely to flip to Democratic control. It remains less likely, but still possible, that the Senate will also change hands. 
• The outcome of the midterm elections will have a number of practical implications for the R&E community and impact everything from funding levels to the implementation of requirements and guidance from federal grant-making and regulatory agencies. 

Why This Matters to You

The Deep Dive

Change is likely coming to Washington as voter frustration with the Administration and current congressional majorities grows on issues ranging from immigration and foreign policy to economic conditions and cuts to federal programs. The balance of power in Congress currently sits at majorities of 219 Republicans to 214 Democrats in the House and 53 Republicans to 47 Democrats in the Senate. A shift of just three seats in the House and four seats in the Senate would mean a change in majority between parties. If Democrats do ultimately win control of either or both houses of Congress, the resulting divided government will have many implications for the R&E community.

A top priority will likely be increased oversight of federal agency activities in the form of investigations and public hearings. Committees driven by Democratic majorities and leadership will issue requests and subpoenas for documents, records, and testimony from agency leaders and White House officials to gather information and inform the public about many of the activities of the federal government over the last two years. In some cases, impeachments and removal of some officials from office may follow if evidence of significant wrongdoing is uncovered.

Stemming from these efforts, there will also be greater scrutiny of major Administration initiatives such as the Genesis Mission, agency staffing cuts initiated by DOGE, OMB’s proposed changes to grant-making rules, and the Department of Education’s efforts to force changes to university policies and priorities. Congressional committees will seek answers about how money has been spent, how decisions have been made, and what the impacts of various policies have been. This may lead to delays or changes to everything from rules and guidance to leadership at federal agencies as the White House responds to congressional pressure. 

There will also be major implications for federal agency funding, particularly for agencies that support scientific research. With a divided government, White House budget plans will be even less likely to translate into final law without significant revisions or limitations as a result of negotiations with congressional leaders. Halts or reversals to many of the major cuts to research funding and changes to the agencies that manage those programs will likely follow.

Finally, bipartisanship will become a requirement to accomplish any major legislative solution. As Congress and the Administration contemplate the future of frontier AI models, investment in new tools and areas of research, and support for students and educators, they will need to collaborate and negotiate a viable path forward.

Looking Ahead

The midterm elections are only a few weeks away, but much can still happen to determine who controls each chamber of Congress and by what margin. Even a small shift in legislative seats could have a major impact on the fate and direction of ongoing and planned federal initiatives, funding levels, and tangible impacts for researchers, students, educators, and the community that supports them. October will be spent campaigning, but November and December will be spent planning for the flurry of activity that will come at the start of the new year.