What Congress’s August Recess Could Mean for Federal Workers

Congress is trying to resolve a short-term federal funding dispute before lawmakers leave Washington for the August recess. Senate leaders have backed a proposal that would generally keep agencies funded through December 11, 2026, while the House has advanced a separate measure that would end sooner, on December 4.

Neither proposal is law. The current issue is a negotiation over competing continuing resolutions, not a final decision to shut down the government.

Why September 30 matters

Fiscal year 2027 begins on October 1, 2026. Unless Congress and the president enact regular appropriations or a continuing resolution by September 30, the federal government could face a lapse in appropriations beginning October 1.

The House measure, H.R. 9770, would provide temporary funding through the earlier of December 4, 2026, or enactment of the applicable full-year appropriations law. Senate records identify H.R. 6500 as the legislative vehicle for the Senate approach, which would generally continue funding through December 11. The one-week difference could matter if lawmakers use the stopgap period to continue negotiating a broader budget agreement.

Three possible funding paths

A continuing resolution, or CR, is a temporary spending law. It generally keeps agencies and programs operating at specified funding levels while Congress works on full-year appropriations. A CR can include exceptions, restrictions or special funding provisions that differ from the prior year.

Full-year appropriations would fund agencies for all of fiscal year 2027 and give Congress a more complete opportunity to set spending levels, priorities and program rules.

A lapse in appropriations occurs when neither option is enacted and no other funding is available. The Government Accountability Office says the Antideficiency Act generally requires agencies to stop activities that lack available funding, except where another funding source or a narrow legal exception applies.

What a continuing resolution could mean

Under a final CR, most agencies would generally continue operating temporarily, but a CR is not the same as a settled budget. Funding levels, restrictions and exceptions could differ from both the prior year and the final full-year appropriations laws.

GAO has found that continuing resolutions can delay contracts, grants and hiring. Agencies may need to use shorter-term agreements or repeat administrative work, while businesses, nonprofits and local governments waiting for federal awards or approvals may face uncertainty. The effects depend on the final legislation and each agency’s available authority.

The House description of H.R. 9770 lists proposed exceptions and extensions involving programs such as WIC, Small Business Administration loan programs, FEMA’s Disaster Relief Fund, the Indian Health Service and wildfire suppression. The Senate approach has different provisions, including reported restrictions on some proposed transfers of funds and a provision affecting the timing of a proposed grant-review policy. Those differences remain part of the legislative process and should not be treated as final until Congress completes action.

What federal workers should know

If funding lapses, agencies determine which employees perform excepted functions and which are furloughed. Under Office of Personnel Management guidance, excepted work can include activities allowed by law to continue during a lapse, such as emergency work involving the safety of human life or protection of property.

Excepted employees may be required to continue working, but pay for work performed during the lapse generally cannot be issued until Congress and the president approve new funding. Employees whose work is neither funded through another source nor designated as excepted generally may be placed in temporary, nonduty, nonpay furlough status.

OPM also distinguishes exempt employees, whose work is not affected because it relies on another funding source or legal authority. Furloughed workers may ultimately receive retroactive pay, but OPM says Congress would determine that through legislation. It should not be treated as guaranteed in advance.

What readers and organizations may notice

A lapse would not mean every federal employee stops working or every federal service immediately closes. Some programs have permanent, multiyear or otherwise available funding, and emergency or legally protected activities may continue. The GAO notes, for example, that Social Security benefits are funded through a permanent appropriation and may continue during a shutdown.

Still, a funding gap could affect customer service, permits, inspections, hiring, contracts, grants and other agency actions. Businesses, nonprofits and local governments that depend on federal awards may see delays even if a full shutdown is avoided.

The next milestones are congressional action before the August recess, the September 30 funding deadline and the separate December 4 and December 11 expiration dates under the House and Senate approaches. The practical impact will depend on what Congress ultimately passes, what exceptions it includes and how agencies implement it.

Sources

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