The FY2027 Budget Request: What Business and Technology Leaders Need to Know

By Zack Huhn, Co-Founder & National Director, Enterprise Technology Association

Published April 4, 2026 | hello@joineta.org

The White House released its Fiscal Year 2027 budget request on Friday, and the signal it sends to the enterprise technology community is unmistakable: national security is the overwhelming priority, and nearly everything else — including the science, workforce, and innovation infrastructure that powers the U.S. technology ecosystem — is being asked to absorb significant cuts.

This is a messaging document, not a law. Congress will ultimately set spending levels, and recent history tells us lawmakers will push back on the deepest proposed reductions. But for business leaders, economic development organizations, and technology ecosystem builders, this budget reveals the administration’s strategic posture heading into the second half of 2026 — and it demands attention.

Here’s what matters most.

The Headline Numbers

The FY2027 request proposes $1.5 trillion in defense spending, a 42% increase — roughly $445 billion — over FY2026 enacted levels. It is the largest defense budget request in decades, driven substantially by the ongoing U.S.-led military engagement with Iran.

On the other side of the ledger, non-defense discretionary spending would be cut by $73 billion, or 10%. The administration frames this as eliminating waste and returning responsibilities to state and local governments. For the technology and workforce sectors, the downstream effects are where the real story lives.

Science and Research: NSF Faces a 55% Cut

The National Science Foundation — the backbone of federally funded basic research in the non-medical sciences — would receive just $4.0 billion under this request. That represents a cut of approximately $4.8 billion, or nearly 55%, from FY2026 enacted levels.

To put that in perspective: the CHIPS and Science Act authorized $18.9 billion for NSF in FY2027. The request comes in at roughly one-fifth of that authorization.

Within that diminished topline, the budget does maintain designated funding for AI research (~$655 million) and approximately $200 million for NSF Centers programs, including the National AI Research Institutes and Quantum Leap Challenge Institutes. AI and quantum information science are identified as “Frontier Initiatives” — the administration’s highest strategic priority designation within NSF. But these priorities are operating inside a drastically compressed overall envelope.

For organizations like ETA that work at the intersection of AI education, workforce development, and ecosystem building, this creates a paradox: AI is declared a national priority, but the agency most responsible for translating that priority into research, education, and regional capacity is being asked to do far more with far less.

Workforce Development: MASA Returns

The Department of Labor budget again proposes the Make America Skilled Again (MASA) framework — a $3.4 billion consolidated grant that would merge 11 existing workforce development programs into a single block grant to states. Congress rejected this consolidation in FY2026 and provided mostly flat funding instead. The administration is making the case again.

The MASA proposal would fold together Adult Employment and Training Activities, Youth Activities, Dislocated Worker programs, Apprenticeship funding, Indian and Native American Programs, and several others. The stated rationale is flexibility: let states and localities spend workforce dollars where they see the greatest need rather than navigating a fragmented system of formula and competitive grants.

The net effect, however, is a meaningful reduction. Current WIOA Title I funding stands at approximately $5.67 billion. The $3.4 billion MASA proposal represents roughly a 29% cut to the federal workforce development investment.

The budget also again proposes eliminating Job Corps and the Senior Community Service Employment Program, and continues the transfer of the Office of Career, Technical, and Adult Education from the Department of Education to DOL.

One bright spot: the administration continues to support Workforce Pell Grants, which began expanding access to short-term credential programs in July 2026. This aligns with the broader shift toward skills-based pathways and shorter-duration training — a direction ETA has been advocating through our AI Ready programs and National AI Accelerator.

Education: Continued Path Toward Consolidation

The Department of Education would see a 2.9% cut to $76.5 billion in discretionary funding. The budget reiterates the administration’s goal of dismantling the federal education bureaucracy and transferring functions to other agencies or to states.

Key proposed eliminations include TRIO, GEAR UP, and the Fund for the Improvement of Postsecondary Education (FIPSE). Minority-Serving Institution programs would face a $354 million cut. The Institute of Education Sciences would see an 85% reduction in nonstatutory spending.

For the technology workforce pipeline, the transfer of career and technical education to DOL is the most consequential structural change. It signals a philosophy that workforce training belongs closer to the labor market — not embedded in the education bureaucracy. Whether that produces better outcomes depends entirely on execution at the state level.

NASA, Energy, and the Innovation Ecosystem

NASA would be cut 23% to $18.8 billion, with the Science Mission Directorate losing $3.4 billion and 40 missions eliminated. Space technology funding drops by nearly a third. STEM Engagement — the home of Space Grant — is again targeted for elimination.

The budget cancels more than $15 billion in Department of Energy grants related to clean energy, and proposes cuts to ARPA-E and the DOE Office of Science. NOAA grants face significant reductions.

For the broader innovation ecosystem, these cuts reduce the federal footprint in early-stage technology development, clean energy commercialization, and the public research infrastructure that underpins private sector R&D.

What This Means for the Enterprise Technology Community

1. The federal-to-state shift is accelerating. Whether through MASA, education transfers, or explicit language about returning responsibilities to state governments, this budget makes clear that workforce and economic development investment is expected to flow through state-level decision-makers. For organizations working with state economic development agencies — as ETA does through partnerships like AI Ready Ohio with JobsOhio — this elevates the strategic importance of state-level relationships and coinvestment models.

2. AI remains a stated priority, but funding doesn’t match the rhetoric. The administration identifies AI and quantum as Frontier Initiatives and maintains targeted research funding. But a 55% cut to NSF and the continued erosion of workforce development infrastructure undermine the ecosystem that turns research breakthroughs into deployed enterprise capability and skilled workers.

3. The private sector and intermediary organizations must fill the gap. With federal workforce and education funding under sustained pressure, industry-led training, employerdriven curriculum development, and public-private partnership models become more critical — not less. ETA’s approach of connecting enterprises, universities, and regional economic development agencies around AI enablement is precisely the kind of infrastructure the ecosystem needs as federal support contracts.

4. Congressional action will be decisive. Last year, Congress largely rejected the administration’s deepest proposed cuts to science and workforce programs. The same dynamic is likely to play out in FY2027, but the margin of protection may be thinner amid defense spending pressures and the ongoing government shutdown standoff. Business and technology leaders who care about the innovation pipeline need to be engaged in the appropriations process — not just the policy conversation.

ETA’s Position

At the Enterprise Technology Association, we believe America’s AI advantage depends on three things working together: cutting-edge research, a skilled and adaptable workforce, and regional ecosystems that connect technology to industry. This budget puts all three under pressure.

We will continue to build the programs and partnerships that bridge these gaps — through AI Ready Ohio and our planned state expansions, the National AI Accelerator, the US AI Congress, and AI Week conferences across the country. And we will continue to advocate for federal investments that match the scale of the opportunity in front of us.

The FY2027 budget is a starting point, not an ending point. The real work happens in Congress, in statehouses, and in the partnerships between enterprises, universities, and communities that are actually building America’s AI-ready workforce.

We’ll be tracking this closely. If you’re a business leader, economic development professional, or technology executive who wants to stay informed, join ETA and follow our policy intelligence coverage.

Zack Huhn is Co-Founder and National Director of the Enterprise Technology Association (ETA). ETA builds AI education, enablement, and ecosystem infrastructure for enterprises and regions across the United States. Learn more at joineta.org.