February 2026

THIS MONTH FROM
WITT O’BRIEN’S CENTER FOR GRANTS EXCELLENCE

Is Your State Ready for the Next Era of Federal Financial Assistance? 

This Month's Webinar: 

Building State Capacity for a Changing Federal Grants Landscape

When: February 18, 2026 at 2:00 pm ET.

Where: Virtual Webinar

Learning Objectives:

• Explain the federal policy and administrative shifts and impacts to state governments.
• Assess the readiness of their state systems, policies, and staffing.
• Identify key capacity-building priorities—including internal controls, monitoring protocols, financial documentation, and subrecipient management.

 GAO Introduces New Guidance to Strengthen Audit Quality and Risk Management

The Government Accountability Office (GAO) has released a timely new resource, Government Auditing Standards: Frequently Asked Questions: Establishing and Maintaining a System of Quality Management, highly relevant to state and local government grant managers responsible for compliance, oversight, and audit readiness. The guide explains how the 2024 Yellow Book revisions shift audits from a checklist-style quality control approach to a proactive, risk-based quality management system, emphasizing documented risk assessment, ongoing monitoring, and timely remediation. As these expectations closely align with Uniform Guidance requirements for internal controls and subrecipient oversight, the resource helps grant managers better anticipate audit expectations and strengthen governance and accountability ahead of the December 15, 2025, implementation deadline.

IIJA's Final Year: Preparing for Closeouts and Reauthorization

As federal grant landscapes evolve in 2026, transportation infrastructure funding is entering the final year of the Infrastructure Investment and Jobs Act (IIJA) with record spending expected, a critical moment for state and local grant managers to align project pipelines and compliance expectations before program closeouts and any reauthorization or IIJA 2.0 discussions begin. At the same time, the State and Local Fiscal Recovery Fund (SLFRF) program established under the American Rescue Plan Act (ARPA) is winding down with a firm December 31, 2026, spending deadline, signaling the end of one of the most significant federal fiscal support efforts of the pandemic era. Grant managers should take stock of both trends: IIJA’s final-year investment pressures and opportunities, and the SLFRF sunset, which together will shape strategic planning, compliance closeouts, and long-term funding strategies for core services and infrastructure in the years ahead.

For assistance with closeout reports and requirements, or tailored recommendations for alternate funding sources, reach out for a consultation at centerforgrantsexcellence@wittobriens.com

Iowa's New Funding Flexibility Could Redefine Future Federal Grant Structures

Speaking of the next funding cycle, a recent move by the U.S. Department of Education could signal a seismic shift in how federal grants are structured and managed (Iowa gains flexibility with federal education dollars, with other states hoping to follow). Iowa has become the first state to receive federal approval to consolidate several federal education funding streams into a single, more flexible block-grant-like mechanism, giving its education agency greater discretion over how funds are used to support teacher training, English-learner programs, and enrichment activities. While the waiver is relatively narrow now, it could serve as a blueprint for other states seeking broader flexibility and foreshadows potential future changes to federal grant design and accountability that state and local grant managers should watch closely as the federal landscape continues to evolve.

Additional Resources

Comprehensive Guide to Federal Grants