Negotiations to finalize a deal on fiscal 2026 Labor-HHS-Education spending have hit a snag, with lawmakers split on how to handle grant funding for the largest medical research agency.

Much of the funding for that agency, the National Institutes of Health, is doled out via grants to institutions like universities, hospitals and industry players. As with most government grants, NIH administers grant funding annually. For example, with a $1 million five-year grant, the recipient would receive $200,000 per year.

But the Trump administration has pitched shifting to a forward-funding system, meaning that same organization would receive $1 million as a lump sum in the first year under the administration’s preferred policy. In both scenarios, the grantee would still need to issue progress reports on how the funding is used.

The Senate has balked at that proposal, including a rider in their spending bill (S 2587) opposing such a change, while the House bill (HR 5304) does not include that rider. The Office of Management and Budget has pushed back, fighting to make sure such a rider doesn’t land in the final version of the bill.

“I think it’s more the White House has concerns,” Senate Labor-HHS-Education Appropriations Subcommittee Chair Shelley Moore Capito, R-W.Va., said.

“OMB in particular, but the White House in general” have communicated that it is “important to make sure that we have no language that prohibits it,” added House Labor-HHS-Education Appropriations Subcommittee Chairman Robert B. Aderholt, R-Ala.

But Democrats who oppose the policy argue that fewer grantees would receive funding when funding is allocated this way and that it could lead to less overall NIH funding in the future.

“We work very hard to not only fund NIH, but increase funding with the goal that more grants would be made,” said Senate Labor-HHS-Education Appropriations Subcommittee ranking member Tammy Baldwin, D-Wis.

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Some research groups also oppose the change in how grants are administered.

“Unfortunately, the current forward funding process abandons American research at random, regardless of the health, economic, or national security benefits of that research,” said Ellie Dehoney, senior vice president of policy and advocacy for Research!America, a research advocacy nonprofit. “Our hope is that Congress and the administration pause the current process and work together to develop a better model that champions, rather than sidelines, American-led progress.”

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