The Illinois State Association of Counties (ISACo) recently participated in a briefing hosted by the National Association of Counties (NACo) regarding a sweeping proposal from the federal Office of Management and Budget (OMB) that would substantially rewrite the federal Uniform Guidance governing grants and financial assistance.
According to NACo, the proposed rule represents the most significant revision to federal grant regulations in decades and would fundamentally change how counties apply for, administer, and maintain federal funding. NACo encouraged counties to carefully review the proposal, assess its potential impacts, and consider submitting comments before the public comment deadline.
Proposed Rule Would Transform Federal Grant Administration
NACo explained that the proposed rule (2 CFR Part 200 — the Uniform Guidance) would convert the current Uniform Guidance from advisory guidance into binding government-wide regulations applicable across nearly all federal grant programs.
The organization emphasized that the proposal affects an estimated $1 trillion in federal financial assistance and would apply to counties that receive, administer, or pass through federal funding. Although certain formula grants, block grants, and disaster recovery grants would be exempt from some grant termination provisions, many of the new compliance requirements would still apply.
According to NACo, the proposal shifts the federal government's emphasis from ensuring funds are used for their intended statutory purpose toward determining whether grant recipients are advancing current national policy priorities.
Expanded Federal Authority Over Grants
A central concern discussed during the briefing involves expanded authority for federal agencies to suspend or terminate grants.
Under the proposed regulations, federal agencies would have broader discretion to terminate many discretionary grants if they determine a project no longer serves the federal government's interests or agency priorities. NACo noted that the proposal would also authorize stop-work orders with limited explanation and without a formal appeals process.
Presenters said the proposal appears designed to provide a stronger legal framework for future grant suspensions or funding pauses that have previously faced court challenges.
Political Appointees Would Play Larger Role
NACo also highlighted significant changes to the federal grant selection process.
While technical experts would continue evaluating grant applications, senior political appointees within federal agencies would be required to review and approve discretionary funding opportunities and grant awards before they are issued.
According to NACo, this represents a substantial shift from the current process, in which career officials and subject matter experts play the primary role in evaluating grant applications.
New Administrative Requirements
The proposed rule would establish numerous additional compliance requirements for counties, including:
- Expanded oversight of subrecipients, contractors, and affiliated entities.
- Additional written justifications documenting how grant expenditures support federal priorities.
- New reporting and monitoring responsibilities.
- Broader documentation requirements for virtually every grant-funded expenditure.
NACo cautioned that these changes could substantially increase administrative costs for counties and other local governments.
Mandatory Employment Verification
Another notable provision would require recipients of both discretionary and non-discretionary federal grants to verify that employees and contractors performing federally funded work have satisfactory immigration status through the federal E-Verify system.
According to NACo, failure to comply with these certification requirements could place federal funding at risk.
Restrictions on Certain Grant Expenses
The proposal would also establish new limitations on allowable grant costs.
Among the changes discussed during the briefing:
- Conference attendance would generally require explicit authorization within the grant award.
- Professional memberships and subscriptions would require advance approval.
- Publication costs and certain public relations expenses would face additional restrictions.
- General governmental expenses unrelated to specific grant activities would generally not be chargeable to federal awards.
NACo noted these changes could affect workforce development, employee training, and professional certification activities supported through federal grants.
Ambiguous Definitions Raise Concerns
Throughout the briefing, NACo repeatedly emphasized that numerous provisions use terms that are either undefined or only broadly described.
Examples discussed included references to "national policy priorities," "anti-American values," "questionable practices," and "reputational harm."
According to NACo, the lack of clear definitions creates uncertainty for counties attempting to determine compliance and could result in inconsistent implementation among federal agencies.
Viewpoint Neutrality Requirements
One provision receiving significant attention would require recipients of federal funding to maintain "viewpoint neutrality" in the management of county-owned, leased, or controlled facilities.
NACo explained that the proposal could prohibit counties from charging different fees or imposing different requirements for events based on political, ideological, or religious viewpoints.
Presenters suggested the provision could extend beyond current First Amendment requirements and potentially apply even to county activities that are not directly federally funded.
Potential Conflicts with State Law
NACo also warned that certain provisions may conflict with existing state laws and program-specific federal statutes.
The organization encouraged counties to work closely with legal counsel to identify potential conflicts between the proposed regulations and state legal requirements should the rule be finalized.
NACo Encourages County Participation
NACo urged counties to:
- Review the proposed regulations carefully.
- Inventory current federal grants and funding streams.
- Identify potential conflicts with state law and existing grant requirements.
- Work with county attorneys and grant managers to assess operational impacts.
- Submit factual, issue-focused public comments before the federal deadline.
NACo has created an online resource center that includes analysis of the proposal, a template comment letter, and additional educational materials to assist counties in evaluating the rule's potential effects.
According to NACo, federal agencies have already begun preparing for implementation, with the proposed regulations currently scheduled to take effect on October 1, 2026, if finalized.