“Fiscally Reckless, Legally Wrong, and Morally Bankrupt”: Medicaid Cuts Drain Vital School Services

Trump’s new spending law, signed earlier this month, is projected to reduce Medicaid funding by billions of dollars in the coming years. The legislation slashes federal support for the program by more than $1 trillion over the next decade, prompting heavy backlash from disability advocates. However, a significant consequence of the cuts remains largely overlooked: public schools will be hit hard.

Though often associated solely with health insurance and hospital visits, Medicaid is also a vital funding source for public education. The program helps fund critical health and disability services in schools that many students depend on to access their education. Removing it could undermine the infrastructure that allows schools to serve all children, including those with disabilities.

“Medicaid plays an undeniably vital role in schools,” said Casey Doherty, disability policy analyst at the Center for American Progress and doctoral student in Special Education and Disability Studies. “Without it, schools couldn't provide health and disability services at the scale required.”

Medicaid supports approximately $7.5 billion in K-12 health services annually nationally, making it the fourth-largest funding stream for public schools. Districts rely on this resource to provide essential services including school nursing, psychological evaluations, occupational and speech therapy, and behavioral health crisis care.

“We've heard from school district staff that they expect layoffs of school health staff, a reduction in mental and behavioral health services, and fewer funds for assistive technology and specialized equipment for disabled students,” said Doherty. “Districts will likely have to shift limited resources to cover what they can.”

Due to the programs threatened, the Medicaid cuts also jeopardize school districts’ legal compliance. Federal law requires schools to provide a "free appropriate public education" (FAPE) to students with disabilities under the Individuals with Disabilities Education Act (IDEA) and Section 504 of the Rehabilitation Act. These laws mandate that schools provide services and accommodations tailored to individual students' needs, often outlined in legally binding documents known as Individualized Education Programs (IEPs), so that all students are able to access education. 

School districts are already under immense financial pressure when it comes to special education. When IDEA was enacted in 1975, Congress pledged to fund 40% of the additional cost of educating students with disabilities. However, today, the federal government typically covers just 12 to 13%. That amounts to a national shortfall of more than $38 billion, falling 28% short of what was originally promised.

Because of this chronic underfunding, many districts rely heavily on Medicaid to help cover the cost of services mandated by IDEA.

“School districts are extremely dependent on Medicaid to meet IDEA obligations… Medicaid helps fill that gap, and it covers many of the services that IDEA mandates,” said Doherty. “It’s what keeps many of these services functional and available in public schools.

Medicaid funding is more than an extra resource; it is essential for schools to meet their legal responsibilities.

“Medicaid funding in schools is not a luxury, an add-on, or an afterthought. It's literally how schools meet legal obligations under disability civil rights laws. Without Medicaid, districts either violate federal disability law, or they're absorbing unsustainable costs. School districts aren't the bad guy. They may be forced to make horrible decisions and it's not their fault,” said Doherty.

In essence, the federal government is creating a paradox by mandating that schools uphold disability rights but simultaneously stripping the funding that allows them to do so. This could lead to increased lawsuits, compliance complaints, and court challenges over determining who bears responsibility when services disappear.

“It will be interesting to see courts potentially having to consider whether federal funding decisions can justify a school's inability to meet legal obligations,” said Doherty. “What precedent would they rely on? Would it be considered the school district's fault for removing services or would it be considered the federal government's fault?”

These questions are even more pressing in light of recent civil rights office closures. Under the Trump administration, seven of the 12 Office for Civil Rights (OCR) offices have been closed. OCR is a federal agency within the U.S. Departments of Education and Health and Human Services that enforces civil rights laws. These closures have made it much more difficult for families to challenge violations of disabled students’ educational rights. Since the administration’s staffing cuts began in March, OCR has dismissed more than 3,400 complaints in just a few months, prompting concern from former officials and advocates that the agency may no longer be able to reliably enforce students’ civil rights under federal law. 

A 2025 survey by the Healthy Schools Campaign found that 86% of respondents said their schools use Medicaid dollars to fund salaries for school health staff. Many participants also anticipated layoffs and cuts to mental and behavioral health services, along with reduced funding for assistive technology and specialized equipment for disabled students. In total, 59% of districts rely on Medicaid to support mental and behavioral health services, and 46% use it to fund assistive technology and specialized equipment.

The impact won’t be limited to disabled students, but they will bear the brunt. Essential staff funded by Medicaid often make it possible for disabled students to learn in general education classrooms. Without them, disabled students may be pushed out of mainstream schooling altogether, risking a return to the dangerous practice of institutionalizing disabled students.

“Roles like school nurses, occupational therapists, behavioral health support staff… If these roles disappear, students with disabilities may be forced out of general educational settings entirely… They may be then segregated, removed from their peers,” said Doherty. “Disabled students will bear the burden of this unless policymakers do something different and act to restore the funding and preserve students' civil rights.”

Still, disability advocates say there is reason for hope. The law's passage is not the end of the story. Local and national organizing has historically played a powerful role in influencing education and healthcare policy, and continued public pressure could shape how these cuts are implemented.

“It's not over because this bill was passed,” said Doherty. “Continue to call or write or contact your representatives stating how these cuts will hurt your community, you, or your family. Just because a law was passed doesn't mean that we need to be quiet or stop our advocacy.”

Experts contend that what’s at stake is not just funding, but the future of inclusive education. The supports currently paid for by Medicaid have enabled generations of students to learn, thrive, and graduate in integrated settings. Removing that foundation puts civil rights at risk.

“School-based Medicaid funding has long been the plan, part of the program. Stripping it away is fiscally reckless, legally wrong, and morally bankrupt,” said Doherty.