The Most Federally Dependent City in the Country
Washington DC's funding story in 2026 cannot be separated from the federal workforce crisis. Federal government employment constitutes 24.6% of civilian nonfarm employment in the District, compared to 1.8% nationally. DC's federal employment concentration is 13.2 times the national average. When DOGE eliminated approximately 317,000 federal workers nationally, DC absorbed a disproportionate share. The DC Chief Financial Officer projects the loss of 40,000 federal government-related jobs in the District, a 21% reduction in federal employment. The economic cascade is measurable. The CFO forecasts revenue losses exceeding $1 billion over the next three to four years. Employment is expected to decrease 2.6% in FY2026, pushing DC into a mild recession. Real GDP growth is projected at only 0.9%, trailing the national rate of 2.4%. Home prices fell 8.6% year-over-year as of January 2026. Housing inventory surged 50.2% in DC compared to 30.7% nationally, with over 13,500 homes for sale in the metro area. A Washington Post-Schar School poll found that 23% of DC residents were seriously considering moving out of the city. Among households where a member was laid off by the federal government or a contractor, 45% were considering leaving. The office market is worse. DC office vacancy hit 19.7% to 22.8% at the end of 2025. GSA is looking to shed 50% of its commercial real estate footprint, with most reductions coming from the DC metro area. CoStar projects an additional 11.8 million square feet of empty office space by 2027. This is the environment in which DC schools, nonprofits, and community organizations are seeking funding. Every local revenue source (income tax, property tax, sales tax, commercial property tax) is under pressure from the same cause.
Charter Schools: Half the Students, Half the Facilities Funding
DC has the highest charter school market share of any jurisdiction in the country. Approximately 48% of public school students attend charter schools, with the DC Public Charter School Board overseeing 133 schools managed by 66 independent nonprofit organizations. Total DC public school enrollment (DCPS and charters combined) is approximately 99,652 students in 2024-25, with 101,000 expected for 2025-26. The Uniform Per Student Funding Formula (UPSFF) provides $15,070 per pupil at the foundation level for FY2026, a 2.74% increase from FY2025. The formula includes weighted add-ons for special education, English language learners, and at-risk students on top of the foundation amount. Charter schools receive UPSFF funds via quarterly payments adjusted based on audited enrollment, unlike DCPS which receives a lump sum. The facilities gap is the structural problem. Between FY2017 and FY2021, charter schools spent over $4,000 per student annually on facilities but received approximately $3,263 to $3,408 per pupil in facilities allotment, a shortfall of nearly $800 per student. Charter schools spent nearly half their annual facilities allotment on leases and mortgages alone. The disparity is structural, not incidental. DCPS buildings are maintained by the Department of General Services at no cost to DCPS. Charter schools must pay for their own facilities entirely from their per-pupil allotment. Over the past decade, DC has sent more than $1 billion in per-pupil facilities payments to charter school nonprofits, but has no clear accounting of how that money was spent. DC government has historically blocked charter schools from leasing vacant DCPS buildings, despite a legal right to do so. From FY2017 to FY2021, the facilities allotment increased only 9.9% (2.2% annually) while actual per-pupil facility expenses increased 17.2%. The DC Council's FY2026-2029 financial plan includes a 6.7% reduction in the per-pupil funding formula, which would further squeeze charter facilities budgets.
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OSSE Funding and Federal Education Dollars
The Office of the State Superintendent of Education (OSSE) administers $86 million in Elementary and Secondary Education Act funding to 59 LEA grantees, covering Title I-A (low-income students), Title II-A (teacher quality), Title III-A (English learners), and Title IV-A (well-rounded education). OSSE also administers $17.5 million in SOAR (Scholarships for Opportunity and Results) funding, a combination of formula and competitive grants to charter LEAs and nonprofit charter-support organizations. SOAR is unique to DC, created by Congress as part of the DC School Choice Incentive Act. The Office of Public Charter School Financing and Support (OPCSFS) provides direct loans up to $2 million per charter LEA for facilities projects and credit enhancements up to $1 million to help secure additional financing from other sources. Applications are reviewed on a rolling basis. Charter LEAs can also apply for renovation grants to increase total seats or improve quality of existing seats. DC's education outcomes are improving. The four-year graduation rate reached 78.7% in 2024-25, a 2.6 percentage point increase and an all-time high. On the DC CAPE assessment (Spring 2025), 38% of students met or exceeded expectations in ELA (a 4-point increase and the highest level in a decade) and 26% met or exceeded expectations in math (also a 4-point increase). These represent the largest single-year gains in both subjects since the pandemic. On the 2024 NAEP, DC posted the highest gains in math and reading compared to other large urban districts, with fourth-grade math showing an 8-point average increase from 2022. Despite the DOGE disruption, early enrollment signals for 2025-26 show resilience. PK3 applications declined only 2%, less than the 7% decline in births for that cohort. The ratio of applicants to births rose to 0.59, the highest since before the pandemic.
Congress Can Override Any DC Budget Decision
DC's non-state status creates a funding constraint that exists nowhere else in the country. Under the 1973 Home Rule Act, Congress retains plenary legislative authority over the District and can review or nullify any DC legislation. DC residents pay among the highest federal taxes per capita in the nation but have no voting representation in Congress: one non-voting House Delegate and zero Senators. This is not a theoretical constraint. On February 12, 2026, the Senate voted 49-47 to overturn DC's tax decoupling law. DC had passed legislation to decouple from costly OBBBA tax provisions and instead create a local child tax credit of up to $1,000 per child, projected to cut child poverty by 20%. The Senate override strips $658 million in revenue over five years from the District's budget. The DC budget for FY2026 is approximately $21.8 billion in operating funds and $2.6 billion in capital spending. The budget underwent a 30-day Congressional review period under the 2013 Local Budget Autonomy Amendment, which 83% of DC voters approved. But Congress can still attach riders imposing policy on DC residents. Historically, these have restricted marijuana sales revenue, abortion funding, and needle exchange programs. For grant seekers, this means DC's fiscal position is uniquely uncertain. The city can pass tax policy, create programs, and appropriate funds, and Congress can reverse any of it with a simple vote. The CFO's $1 billion revenue loss projection from DOGE does not include the $658 million at risk from the tax decoupling override. DC also faces variable treatment in federal programs. Under the CARES Act, DC was denied $755 million in emergency Coronavirus Relief Fund money that was provided to the least-populous states. DC receives most federal block grants (SNAP, Medicaid, CDBG, workforce training) but is treated sometimes as a state and sometimes not, depending on the specific authorizing legislation.
The OBBBA and Local Safety Net Programs
The OBBBA hits DC from multiple directions simultaneously. SNAP: More than 230,000 families in the DC metro region will lose some or all of their SNAP benefits. DC families projected to lose at least $25 in benefits are expected to lose an average of $231 per month. Nationally, SNAP cuts total $187 billion over a decade, affecting approximately 4 million people including 1 million children. Medicaid: DC extended Medicaid to income-eligible adults regardless of immigration status, a coverage that is now at risk under new immigration-related restrictions effective October 1, 2026. New requirements include eligibility redetermination every six months (instead of annually) and 80-hour-per-month work requirements for expansion adults aged 19 to 64. Housing: The DC Housing Authority received notice from HUD that Emergency Housing Voucher (EHV) funds will run out in 2026. Of 588 DC households receiving EHV vouchers, if all lose assistance, homelessness in the District could increase by 13%. The proposed federal budget also seeks to end Section 8 nationally and block-grant rental assistance to states. The Housing Production Trust Fund (HPTF) provides gap financing for affordable housing production and preservation, with $20 to $30 million designated for FY2026. The Department of Housing and Community Development (DHCD) administers these funds. But DC's affordable housing costs are among the highest in the country, and the combination of SNAP cuts, Medicaid changes, and housing voucher losses compounds the pressure on households already at the margin. For housing organizations, DC's local programs are the primary alternative as federal safety net programs contract.
Local Grants and the Foundation Mismatch
DC hosts 3,392 foundations with $121 billion in total assets, one of the highest concentrations of philanthropic capital in the country. But many are national or international foundations headquartered in DC for proximity to Congress and federal agencies. Their grantmaking focuses on national and global issues rather than local DC needs. The ratio of locally-directed funding to total foundation assets is disproportionately low compared to other major cities. The Greater Washington Community Foundation is the primary locally-focused funder. For DC-based nonprofits seeking local grants, the available programs are small but real. The DC Commission on the Arts and Humanities awarded $26.1 million across 1,086 grants through 9 programs in FY2026, covering all 8 wards. Events DC distributes $750,000 in community grants across two cycles ($375,000 per cycle, individual awards $5,000 to $25,000) focused on youth sports, performing arts, and cultural arts. Events DC also distributes $750,000 in Youth Development Grants to 66 nonprofits. HumanitiesDC offers Community Culture and Heritage Grants of $10,000 and DC Oral History Collaborative grants of $8,000 to $12,000, with Cycle 2 opening March 2026. The DC Attorney General's FY2026 community-based grant programs include Cure the Streets, Domestic Workers Employment Rights, Leaders of Tomorrow (youth violence prevention), and Workplace Rights, running October 2025 through September 2026. For federal contracting, DC's proximity to agencies creates location-specific opportunities, though the DOGE workforce reductions are changing the contracting environment. Organizations that previously served federal employees as customers or partners need to assess whether their local market has fundamentally shifted. Search DC funding opportunities