Public Policy Update - September 22, 2026

Read a summary of recent federal and state policy updates that may affect or interest North Carolinians with intellectual and other developmental disabilities (I/DD). This update, published September 22, 2026, highlights key developments related to the I/DD community.

FEDERAL

Congress

Congress has recently returned from an August recess. Before the break, the House and Senate each passed continuing resolutions to keep the federal government open past September, as we near the end of the fiscal year without a budget approved for the coming year. The two bills were not exactly the same, so we are expecting work on reconciling the differences when they return.

On August 31, 2026, the House returned and quickly voted on the Senate version of the continuing resolution (CR) extending funding for federal programs and services through December 11, 2026. The bill was sent to the president and was signed. Congress now has until December 11, 2026, to approve a budget for the 2026-2027 fiscal year.

In addition to extending federal funding, the CR includes language delaying the implementation of a proposed rule from the Office of Management and Budget (OMB) that would reshape and politicize the federal grantmaking process. Advocates have been concerned about the effects of these changes on grants that impact people with intellectual or other developmental disabilities (I/DD). This delay is temporary and will need to be addressed as the spending bills and other legislation are worked out.

With a CR in place, Congress is scheduled for another recess in October in the run-up to the November elections. Members of the House left on September 16, 2026, and Senate members are expected to leave by the end of September. Given the short timeframe and quickly approaching midterm elections, no major legislation has been taken up. Senate members have focused on confirming federal judges during this time.

The House and Senate are expected to return on November 9, 2026. Between November 9th and December 11th, lawmakers will need to either pass all 12 remaining FY27 spending bills for federal programs, enact another CR to temporarily extend funding for federal programs again, or risk a government shutdown. The path Congress pursues moving forward may depend on whether control of the House or Senate changes hands after the election. For example, Congress might pass all 12 FY27 spending bills before the year ends to give the incoming Congress a “clean slate” to start their work, but if control of both the House and Senate flip, lawmakers may hold off on finalizing FY27 spending bills to give the new Congress the opportunity to rewrite the spending bills in the new year.

Department of Education

Earlier in September, the U.S. Department of Education’s secretary for the Office of Special Education and Rehabilitation Services (OSERS), Kelly Rogers, unexpectedly resigned. This happened during the same week that the Education Department began moving staff to different departments. These moves are a result of interagency agreements announced in June that transfer many special education functions to other agencies. The health agency and certain civil rights work were transferred to the Justice Department. One hundred OSERS staffers have been moved to the Department of Health and Human Services, and 57 employees in the Education Department’s Office for Civil Rights have been relocated to the Department of Justice.

The administration has stated that these moves will reduce bureaucracy. Advocates have said it will create confusion and more complexity as schools and families will need to go to multiple agencies for guidance, funding, and questions about regulations. There has been some interest in Congress to introduce legislation to halt these changes. Continued advocacy around the consequences of these moves is needed.

Threats to Community Integration for People with Disabilities

We previously reported that the Justice Department’s Office of Legal Counsel issued a statement in June stating that neither the Americans with Disabilities Act nor Section 504 of the Rehabilitation Act “require states to treat mentally disabled patients in the most integrated setting appropriate to their needs.” Even the memo noted that its position “is out of step with the common understanding” in the federal courts of Olmstead v. L.C., a landmark 1999 Supreme Court decision on the rights of people with disabilities to access services in the community.
Now the Department of Justice is citing this memo and is attempting to do away with rules requiring that people with disabilities be served in the community.

The U.S. Department of Justice alongside Texas, Alaska, Florida, Louisiana and Montana want to drop all references to the phrase “most integrated setting” in the U.S. Department of Health and Human Services’ regulations related to Section 504 of the Rehabilitation Act. Instead of defending the rights of people with disabilities, it appears that they are switching sides.

As we have noted before, even if the wording about community integration is removed from the Section 504 regulations, the law itself has not changed. Only Congress can change the law. But people with disabilities may feel the effects of the federal government refusing to enforce the law. At the state level, it is imperative that we continue to educate and advocate to ensure that people with disabilities maintain the right to live in the community.

STATE

Response to Department of Justice Actions Related to Olmstead

In response to the actions at the federal level, Governor Stein, along with 17 other governors, sent a letter to the US Department of Justice opposing federal actions that weaken protections or lessen the rights of people with disabilities to live in integrated settings as established by Olmstead. They emphasized that we cannot reverse the progress that has been made in ensuring people with disabilities have choices about where and how they live.

From the letter to AG:

Recent actions have already created significant uncertainty for states and for the workforce of dedicated individuals who support people with disabilities throughout the country. More importantly, people with disabilities and their families are terrified about moving backwards - or worse - becoming institutionalized against their will - after decades of advocacy. We simply cannot risk reversing the progress this country has made in ensuring Americans with disabilities have meaningful choices about where and how they live their lives.

We strongly oppose any federal actions that would weaken protections against unnecessary segregation or diminish the right of people with disabilities to receive services in the most integrated settings appropriate to meet their needs, consistent with established Olmstead precedent. Community integration is not an abstract legal concept. It means having a home, being able to work, attend school, shop, worship, build relationships, and participate in an ordinary civic life.

Transition to Community Living Settlement Agreement

On September 11, 2026, North Carolina and the US Department of Justice filed a motion asking a federal district court to end its oversight of the Transitions to Community Living (TCL) settlement agreement. TCL is a program designed to move adults with serious mental illnesses out of institutional settings like adult care homes and into community housing settings with services and supports, if they choose. For the last 14 years, the program has been under the oversight of the federal court. Disability advocates and independent reviewers point out that the state has not met every major requirement under the agreement, leading to debate over future accountability. State officials note that the program has helped over 4,150 individuals with serious mental illnesses move into community-integrated housing and diverted roughly 6,700 people from adult care homes. North Carolina Department of Health and Human Services (NCDHHS) Secretary Dev Sangvai stated that state support for housing, crisis response, peer support, and employment services will remain a priority despite the end of federal oversight.

New Assessment Tool for 1915(i)

NC Medicaid has released Version 3.0 of the 1915(i) Assessment Tool and a new companion guide, which becomes mandatory starting October 1, 2026, for all new 1915(i) service requests and reassessments. One change is that eligibility and Care Plan timeframes will not align with the participant’s birth month. This is a welcome change that should simplify the process. The strict eligibility end date has been removed to prevent shortening a member's full eligibility period unexpectedly. There is a new Companion Guide that provides specific instructions for care managers and providers on how to complete the form. The step-by-step guidance and specific scoring definitions are intended to reduce subjectivity and improve accuracy. NCDHHS has provided mandatory training webinars and office hours to ensure care management staff are proficient before the October 1, 2026 implementation.