Funding Education Opportunity: Trump gutted the U.S. Department of Education—what this means for taxpayers and the public

Good morning,

President Donald Trump signed an executive order to shutter the U.S. Department of Education, but his administration has acknowledged that this would require congressional approval — an unlikely event, as it would require an act of Congress, including 60 votes in the U.S. Senate.

However, this setback hasn’t deterred the Trump administration from taking a sledgehammer to the agency by slashing over a thousand staff and reportedly eliminating dozens of federal contracts. Winding down the Education Department, an agency long considered dubious by many conservatives and libertarians, is welcome news, but the Trump administration’s slash-and-burn technique could have negative unintended consequences that even undermine its own initiatives.

Winding down the U.S. Department of Education

In March, the Department of Education announced that it would cut its workforce by approximately 50% or 1,900 jobs via layoffs or voluntary resignations. The American Enterprise Institute’s Senior Fellow and Director of Education Policy Studies, Frederick Hess, estimated that these cuts would save taxpayers $400 million in salaries and benefits.

However, the layoffs lack precision because the executive branch can’t cut individual staff; instead, it can “only eliminate whole units or ‘subcomponents’” due to civil service rules, Hess noted. Accordingly, the department’s sweeping staff reductions could result in unintended consequences.

For instance, even though U.S. Secretary of Education Linda McMahon claims she is committed to retaining the National Assessment of Educational Progress (NAEP)—the biannual exam often called the nation’s report card administered by the National Center for Educational Statistics (NCES), which provides insights into students’ progress nationwide—only three employees remain at NCES after the administration slashed its workforce by 97%. 

As a one-of-a-kind study, boasting decades of research that predates the 1980 establishment of the Department of Education, NAEP has often been used by researchers and school choice supporters to make apples-to-apples comparisons of states’ progress and outcomes. Cutting NAEP so sharply shows how the far-reaching layoffs could unintentionally undermine school choice and reform initiatives the Trump administration wanted to retain. 

The Department of Government Efficiency (DOGE) also audited the Department of Education and claims it terminated 89 contracts, valued at more than $881 million. However, AEI scholar Nat Malkus argued that DOGE’s estimated savings are significantly overstated, and that more accurate savings are closer to about $197.6 million in savings, approximately 22% of DOGE’s estimate. 

Altogether, Hess’ and Malkus’ estimated total savings amount to about $600 million or 0.4% of the Education Department’s 2024 budget. 

Hamstringing the Department of Education vs Rebuilding It

While the savings gained through downsizing are underwhelming, the staffing cuts could portend major cultural shifts, especially in the agency’s research branch, the Institute of Education Studies (IES), where 90% of the staff were laid off.

AEI’s Mark Schneider, who led IES during the first Trump and the Biden administration, said he encountered “laziness, [and] corruption” during his tenure there. He even recounts how one staff member openly admitted to being captured by a special interest (which is illegal). 

Bureaucratic red tape often stopped Schneider from implementing even modest reforms, he says. As a result, he argued that the Trump administration’s slash-and-burn techniques at the agency were long overdue. “Every once in a while, you just need to just blow the shit up and rebuild,” he explained.

Rebuilding the Department of Education and its research division, however, is a hotly contested debate on the right. In an interview with the Manhattan Institute’s Chris Rufo, The New York Times columnist Ross Douthat argued that the Trump administration should rebuild the department, filling it with conservatives who would “run the actual bureaucracy.”

Rufo, on the other hand, viewed the department as “beyond reform,” arguing that the Trump administration should cripple the agency as much as legally possible. Unlike Douthat, Rufo believes that conservatives lack the manpower to successfully compete in the Department of Education’s bureaucracy.

So far, Rufo’s arguments seem to have resonated with the Trump administration, especially in light of Secretary McMahon’s recent skepticism of IES’ value to taxpayers. 

Overall, these changes show that the Trump administration plans to run the Department of Education on a skeleton crew and significantly reduce the federal role in K-12 education research. Although future administrations could try to expand the federal department to its previous size, it would likely be a monumental task, especially since many would-be workers could be skeptical of their long-term job security.

What’s next for federal and state lawmakers

While downsizing the Department of Education should be a success, much work remains. Even if the department ceased to exist, many federal grant programs under the Elementary and Secondary Education Act (ESEA), such as Title I, which sent approximately $16.5 billion to school districts in 2021, would continue to operate.

Unfortunately, these funds are allocated opaquely, inflexibly, and lack portability. For example, Title I funds do not follow low-income students who transfer to new schools through public or private school choice programs. 

The next step for Congress is to rethink how federal education funds are distributed. Proposals, such as the A PLUS Act (introduced by Sen. Steve Daines (R-MT) in the Senate and Rep. John Moolenaar (R-MI) in the House), would increase federal education funds’ flexibility so state policymakers can use them for any education purpose under state law.

If codified, most state policymakers would have a chance to change how about 10% of their state education budgets are allocated. Yet, Congress often attaches strings to its funding, and the flexibility of these federal funds would depend much on the federal requirements that accompany them. Plus, to maximize funding flexibility, state policymakers would need to update any related state laws and regulations, which often stifle federal funds’ versatility just as much as federal ones. 

Federal education funding needs to be reformed, and the Department of Education can certainly be downsized, but these efforts should be strategic and student-focused. 

From the States

In other important education and school choice developments across the country, as mentioned briefly above, policymakers advanced public and private school choice laws in New Hampshire, Arkansas and North Dakota. State policymakers are also considering school choice and funding-related proposals in Texas and Alabama.

In Texas, the House approved Senate Bill 2, a private school choice proposal, sending it back to the Senate for concurrence. This is the first time a private school choice bill has successfully passed the state’s lower chamber, according to The Texas Tribune. If signed into law, the program would provide $10,000 scholarships to 100,000 students to pay for private school tuition and other approved education expenses. Participants with disabilities would receive an additional $1,500. Home-schooled students are also eligible to receive scholarships of $2,000. The Texas House also approved a K-12 education funding package amounting to $7.7 billion, increasing per pupil revenues by $395 and providing raises for teachers. 

The Arkansas House and Senate passed Senate Bill 624, which would ensure that students can transfer to any public school inside their school district. It would also require the state Department of Education to collect and publish key open enrollment data. The bill awaits Gov. Sarah Huckabee Sanders’ signature. If codified, Arkansas’ open enrollment law would tie for third best nationwide in Reason Foundation’s annual open enrollment best practices rankings with West Virginia and Arizona. 

Lawmakers in the New Hampshire House passed House Bill (H.B.) 741, which would establish a universal open enrollment program, allowing students to attend public schools with open seats regardless of where they live. If codified, New Hampshire’s open enrollment score would rank fifth nationwide per Reason Foundation’s open enrollment best practices. Additionally, the lower chamber also passed H.B. 115 to expand eligibility to students whose families’ incomes are 400% of the federal poverty limit (current law limits participation to students whose families’ income is 350% of the federal poverty limit).

Due to higher demand than anticipated for Alabama’s new private school choice program, the House Education Budget Chair, Rep. Arthur Orr, proposed increasing the program’s funding from $100 million to $135 million. So far, nearly 37,000 students have applied for scholarships, which are valued up to $7,000 per pupil attending an approved private school. 

The North Dakota House approved Senate Bill 2241, letting charter schools operate in the state. Currently, North Dakota is one of seven states that don’t have any charter schools. 

What to Watch

Despite codifying a robust private school choice law in 2024, Louisiana lawmakers are backpedaling and may not fund the scholarships. 

After 33,000 students applied for Louisiana’s LA GATOR private school choice scholarships, state policymakers want to cut the program’s $50 million in funding. Instead of providing the promised scholarships to students, the legislature’s leadership announced they will use the funds to pay for teacher and support staff stipends. Using the funds set aside for the LA GATOR program would only pay for about 25% of the proposed stipends. 

This month, all Iowa students will be eligible to receive an education savings account valued at nearly $8,000 per student. This new expansion lifts income restrictions that previously limited student eligibility. During the 2024-25 school year, almost 28,000 students received a scholarship.

Utah’s Third District Court ruled that the state’s private school scholarship is unconstitutional. The program, launched in 2024, provided eligible students with scholarships valued at $8,000. In her decision, Judge Laura Scott found that the program’s funding came from revenues reserved for public schools. Utah Governor Spencer Cox plans to appeal the decision.

The Latest from Reason Foundation

–Why open enrollment laws that let public schools reject transfer students aren’t good enough 

–Open enrollment can help New Hampshire’s students and school districts

–Kansas schools fought open enrollment but now need it to stay afloat

–The push for greater oversight of homeschoolers

–Missouri’s 2025 K-12 open enrollment proposals

Reason Foundation also testified or submitted public comments on open enrollment proposals in Montana, Nevada, Maine, and New Hampshire.

Recommended reading 

Less Than Half of Student Borrowers Are Paying Their Loans
Preston Cooper at American Enterprise Institute

“In February 2020, the last month before the payment suspension took effect, 60 percent of Nelnet’s [the largest federal student loan servicer] borrowers were in current repayment on their loans. By February 2025, the share in current repayment had dropped to just 38 percent. Current repayment rates have not risen above 40 percent in the past five months since the payment pause effectively ended.”

Trump’s anti-DEI funding threat hit like an earthquake. This is what’s happened since.
Erica Meltzer at Chalkbeat

“The Trump administration is signaling that states should take its threats to withhold funding seriously. In an unprecedented move, the U.S. Department of Education said Friday it was moving to strip K-12 aid from Maine following an investigation under Title IX — the federal law banning sex discrimination in education — into the state’s policy for transgender athletes.”

The Supply Side of School Choice: What Happens To Private School Tuition When Demand Grows?
Marty Lueken at Informed Choice

“Economic theory predicts that in the short term, both targeted and universal choice programs will increase tuition prices to some extent. In the short term, supply is relatively inelastic. Private schools can’t instantly add seats, build new classrooms, or hire more teachers. As a result, families at some schools may face higher prices and limited availability while the financial assistance from the choice program may or may not cover the new higher tuition.”

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