NSDA is currently analyzing, providing resources and asking for input.

What are we hearing?   NSDA has been collecting feedback on potential impacts from the rule changes and across the board, our members are extremely concerned.  Please send feedback to your State Association lead or Chantalu@nationalspecialdistricts.org.   Most concerning ?  1. potential termination of grants at anytime for any reason 2. Review and cancellation by political appointees which may create bottlenecks 3. No consultation process of the rule proposal 4. potential for impacts to municipal bond ratings and project delivery.

Extension Request: The National League of Cities (NLC) U.S. Conference of Mayors (USCM), National Association of Counties (NACo), International City/County Management Association (ICMA), National Conference of State Legislatures (NCSL), Council of State Governments (CSG), Government Finance Officers Association (GFOA), National Association of Development Organizations (NADO), Association of Metropolitan Planning Organizations (AMPO), and the National Association of Regional Councils (NARC) sent a letter to Office of Management and Budget (OMB) Director Russ Vought and OMB Office of Federal Financial Management officials Joel Savary and Andrew Reisig asking for a 45-day extension of the public comment period for the rule. The letter argues that the current timeline is insufficient to evaluate a sweeping, government wide rewrite affecting roughly $1 trillion in federal grants; it emphasizes that state and local governments need more time to assess significant operational impacts and provide meaningful feedback to ensure the rule reflects on the ground implementation realities. 

Background:

The Office of Management and Budget (OMB) has proposed a wide-ranging rule aimed at reworking the federal funding award process for local governments, organizations, and institutions. Building on previous executive orders, specifically Executive Order 14332, “Improving Oversight of Federal Grantmaking", the regulation would allow federal agencies to terminate grants when the award no longer advances Federal agency priorities or the national interest, or withhold funds from organizations promoting specific diversity concepts while placing greater emphasis on political appointees’ roles in the grantmaking process.

The administration is providing a 45-day comment period on the rule, published in the Federal Register, and is aiming to issue a final rule by October 1. The October date would allow the federal government to determine what requirements FY27 awards are subject to. Comments on the proposed rule are due July 13, 2026. 

NSDA encourages special district officials to review the proposed rule and submit comments reflecting any impacts, questions or concerns.  NSDA is reviewing the proposed rule to consider comments and will provide updates as the rulemaking progresses.

In submitting comments, please search for recent submissions by OMB to find docket OMB-2026-0034, which includes the full text of the proposed revisions and submit comments there. 

Read the Proposed Rule here

 Submit Comments here

Resources and background materials:

GFOA - Understanding the Proposed Rewrite of 2 CFR 

https://www.youtube.com/watch?v=RL-7cww-XzY

https://gfoa-craftcms.files.svdcdn.com/production/pdfs/UG-Changes-Webinar_6.17.pdf?dm=1781787057 –

PowerPoint Slide deck

GFOA - Federal Grant Environment is Changing: What Local Governments Need to Know

https://www.gfoa.org/changing-federal-grant-environment

GFOA Announcement - OMB - Sweeping changes to uniform guidance - 6.4.26.pdf

 

Association of Metropolitan Organizations : Potential Impacts Analysis:

Regulation-for-Federal-Financial-Assistance-Analysis-6.2.26 (2).pdfOMB_Extension_Request_6.17.2026.pdf