The Federal Judiciary requested Congress’ approval of $9.4 billion in total “discretionary” funding for fiscal year (FY) 2026. That sounds like a lot of money, but it is important to understand the facts. First, the Judiciary’s budget represents only 0.1 to 0.2 percent of the total federal budget authority. Second, this budget request supports the United States Supreme Court, courts of appeals, district and bankruptcy courts, special courts, probation and pretrial services, federal public defender organizations, the United States Sentencing Commission, the Federal Judicial Center, and the Administrative Office of the United States Courts (AO). While the request represents a 9.3 percent increase over the FY 2025 enacted level, much of this increase is necessary to maintain current services.
On September 3, 2025, the House Appropriations Committee approved the Financial Services and General Government appropriations bill for FY 2026. This bill provides the Judiciary with only $8.9 billion in discretionary appropriations for FY 2026, which is $494 million below the Judiciary’s request. The White House also submitted to Congress a proposed federal employee pay plan for calendar year 2026, which includes a 1.0 percent pay adjustment for federal civilian, non-law enforcement personnel and a 3.8 percent adjustment for certain federal law enforcement officers. The unfortunate result of all this is that all federal court clerk’s offices, including ours, are being faced with a sixteen (16.0) percent across-the-board reduction to discretionary portions of the Judiciary’s budget used to fund clerk’s offices, probation units, pretrial units, and other items.
Since neither a FY 2026 budget nor a continuing resolution (CR) was passed, federal entities other than the Judiciary “shutdown” as of October 1, 2025. During a shutdown, only excepted activities may be performed per the Antideficiency Act (31 U.S.C. 1341-1342). These activities must involve the exercise of the Judiciary’s constitutional functions, the prevention of imminent danger to human life and property, the preservation of Article III functions, and/or activities that are otherwise authorized by law. Excepted activities are carried out by excepted federal employees even during a freeze on spending, including salary payments.
Despite continuous budget cuts and freezes over the past few years, and as a result of the excellent budgetary stewardship by court leadership, the Judiciary has been operating in a pre-shutdown stage known as “Phase 1” since October 1, 2025. During Phase 1, the Judiciary may operate normally, albeit with a reduced budget. We expect all federal judicial employees to be paid, as scheduled, on the first and second pay periods of October 2025. If a budget or CR has not been passed by 11:59 p.m. ET on October 17th, the Judiciary will enter shutdown “Phase 2” effective Monday, October 20, 2025.
During Phase 2, only excepted work may be performed per the Anti-Deficiency Act, and Court employees will not be paid immediately for this work. Pursuant to the Government Employees Fair Treatment Act, Judiciary employees performing excepted activities, which should include everyone in FLNB’s Clerk’s Office, and furloughed employees will be entitled to pay for work during a Phase 2 shutdown but only after Congress passes a CR or FY 2026 budget. Until then, Court employees will remain unpaid.
If a CR is passed for the duration of FY 2026, Judiciary funding will be frozen at the same level as FY 2025. This would be the third straight year without a funding increase. The proverbial “bottom line” is that nothing about the federal Judiciary’s budget is good news. Our Court will continue to operate to the best of its ability, in spite of the funding shortfalls and under staffing. We trust that everyone who practices in this and other bankruptcy courts will remain sensitive to the underfunding of the federal courts and the challenges the lack of funding presents to all of us.