What We Know about the Trump Administration's "Freeze" on Federal Grant Funding

• UPDATE: On Tuesday January 28th, U.S. District Judge Loren L. AliKhan ordered an administrative stay. The administrative stay, prompted by a lawsuit brought by nonprofit groups that receive federal funds, lasts until Monday afternoon and applies only to existing programs.

  
  

• UPDATE: OMB rescinded the memo on Wednesday January 29th due to both legal challenges and public backlash. However, the administration has shown that they are focused on these type of programs for future cuts. The NYT has a list of 2,600 federal programs that are at risk.

On Monday, January 27th, the White House budget office, led by acting director Matthew Vaeth, announced a suspension of all federal grants and loans. According to administration officials, this measure is needed to ensure that all funding aligns with Trump's executive orders. You can read the memo here.

In a briefing today, Tuesday January 28th, White House Press Secretary Karoline Leavitt stated that no direct assistance including Social Security, SNAP, or other "welfare benefits" would be impacted. However, she was not able to say which programs would be affected.

But last night on X, Senator Ron Wyden from Oregon posted, "My staff has confirmed reports that Medicaid portals are down in all 50 states following last night's federal funding freeze."

State Medicaid agencies, federally funded Head Start early education programs and community health centers were briefly cut off from access to the Payment Management Services web portal, or PMS, run by the Department of Health and Human Services, which handles billions of dollars of payments every year. 

Following the release of additional guidance and clarification from the Office of Budget Management, Head Start agencies are not included in the list of federal grants and loans whose funds are frozen. White House Press Secretary Leavitt later posted on X that the White House knows the Medicaid portal is down and said it “will be back online shortly.”

What we know:

• The pause is relevant for all “federal financial assistance,” which is defined by 2CFR 200.1 as assistance that recipients or subrecipients receive or administer in the form of grants, cooperative agreements, non-cash contributions, direct appropriations, food commodities, loans, loan guarantees, interest subsidies, and insurance.

• Federal agencies are required to review all grants (and other financial assistance, disbursements, etc.) giving final approval to political appointees, and compile lists of recipients no longer eligible under the series of executive orders pertaining to ending DEI, the green new deal, and funding nongovernmental organizations that undermine the national interest.

• Additional guidance was released Tuesday specified that "any program that provides direct benefits to Americans is explicitly excluded from the pause." In addition to Social Security and Medicare, already explicitly excluded in the guidance, mandatory programs like Medicaid and SNAP will continue without pause," the updated guidance said. The memo adds that funds for small businesses, farmers, Pell grants, Head Start, rental assistance and other similar programs are also exempt. 

  
  

• There is a need for clarity as to which programs will be impacted.