When disagreement over budget specifics –like Affordable Care Act subsidies or the operations of Immigration and Customs Enforcement – stops a congressional appropriations bill from passing before the previous funding term expires, the federal government partially ceases operations.

Some federal activities, like the operation of the Medicare and Medicaid programs, are deemed “essential,” and continue even during a shutdown. Other programs require specific authorization before the beginning of a new funding term. This article examines the impact of federal shutdowns on local funding authorities.

Bethlehem Area SD

According to its 2025-26 budget document, Bethlehem Area SD relies upon federal funding for $7.47 million of its total $367.52 million in funding this academic year. CFO Harry Aristakesian responded to questions about the district’s budget and federal shutdown impacts. The district weathered the Oct. 1–Nov. 12, 2025, shutdown uneventfully, thanks to the nature of the funding, the district’s strong tax base, and the timing of the shutdown.

“In terms of the General Operating Budget,” Aristakesian explains, “Title I is the largest federally funded program.” Several titles of the Elementary and Secondary Education Act of 1965 affect the district: roughly $5.32 million through Title I; just over $563,000 through Title II-A; less than $212,000 through Title III-A; and slightly more than $317,000 through Title IV-A.

“We also received IDEA [Individuals with Disabilities Education Act] funds passed through the IU [intermediate unit],” Aristakesian notes, estimating the total IDEA funding for the current year at $2,729,660.

“The good news,” Aristakesian says, “is that most federal funding is forward funded so the biggest impact of last year’s federal shutdown was the delay in funding.” He adds that he expects to be “fully reimbursed for all of our expenses.”

How many weeks or months of shutdown could the district weather without dipping into its own funds?

“It depends on the timing of the shutdown,” Aristakesian explains. “In the beginning, part of the school year we have a lot more flexibility since we’re collecting real estate taxes.” However, he notes, “This is not the case in the second part of the year,” adding that “the closer we get to June, the quicker we would need to use our fund balance.”

City of Bethlehem

At press time, emails to City of Bethlehem Controller George Yasso and Deputy Controller Michele Liberto had not been answered.

According to the 2026 approved budget document on the city website, it expects federal CARES Act funding to cover just over 3 percent ($3.48 million) of its General Fund revenue. The city relies on other federal funding for 7.72 percent ($3.01 million) of its Nonutility Capital Fund revenue, 5.85 percent ($750,000) of its Water Capital Fund revenue, and 3.84 percent ($393,750) of its Sewer Capital Fund revenue.

Dozens of initiatives detailed on page 301 of the budget are funded through community development block grants totaling just over $2.6 million. It is unclear how long a pause in federal funds disbursement the city and its local grantees could withstand.

Northampton

County

The Right to Know request for information on federal funding sources, sent to the Northampton County Controller’s office, was answered with a letter from county solicitor Goudsouzian & Associates notifying the Press that processing would take up to 30 days. More information will be published when it is provided.

The 2026 budget document on the county website shows dozens of federally funded line items, from $3.09 million in Title IV-D funds for Domestic Relations (nearly 85 percent of this department’s revenue) to the raft of federal programs providing more than a quarter of the expected $34.73 million of revenue for Children, Youth & Families. Numerous revenue items, including several block grants, are listed as “intergovernmental” without clear information on whether the ultimate source of the funds is federal or state.

Although some of Northampton County’s federal funding sources, such as the Medicare and Medicaid programs, typically continue uninterrupted during a federal government closure, others have unclear stability in a shutdown situation. For example, the more than $30 million of Temporary Assistance to Needy Families money funding the county’s HealthChoices, are in a category of funding that is susceptible to gaps during a shutdown.

The National Association of Counties explains on a section of its website created during the 2025 shutdown, “The Temporary Assistance for Needy Families program expired on Sept. 30, 2025. Given that TANF’s reauthorization is tied to the funding extension, the program cannot issue first quarter payments … States may use unspent funds or Maintenance of Effort dollars to continue the program. However, the ability of states to sustain TANF funding may vary based on their financial situations.”

The situation is similar for Title IV-B, which funds child welfare programs that have the goal of family preservation. (Title IV-B funds make up 0.32 percent of Northampton County’s Children, Youth & Families revenue.) NACo explains: “Authority for Title IV-B expired on Sept. 30, 2025. Given that Title IV-B reauthorization is tied to the funding extension, the program cannot issue first quarter payments. While states may be able to bridge the gap using their own dollars, the financial circumstances around their ability to do so may vary.”

A county’s ability to weather an extended shutdown depends heavily on the county’s general fund reserve, sometimes called a “rainy day fund.” The Government Finance Officers Association advises municipalities to hold in reserve at all times two months’ worth of operating revenue (16.7 percent of annual revenue).

“The way to decide the best amount for your local government is to better understand your risks,” GFOA senior research manager Shayne Kavanagh writes. “Unfortunately, people are not good judges of risk. For example, researchers have found that people are overconfident in their ability to predict the future.” Kavanagh recommends that county governments “use mathematical techniques to analyze the probability of a risk happening and the potential magnitude of the damages if it does happen.”