Sharing the Facts About the OMB Funding Freeze Memo

On Jan. 27, the Office of Management and Budget (OMB) issued a sweeping memo directing federal agencies to pause potentially $3 trillion of federal financial assistance. OMB stated that the rationale for the pause was to give agencies time to determine if spending aligns with President Trump’s policy priorities as outlined in numerous executive orders issued in the first days of his presidency.

OMB’s mandate potentially applies to grant and loan funding for a wide range of programs, including those that directly serve everyday Americans — public school children, veterans, hurricane and wildfire victims, rural hospital administrators, Medicaid recipients, and more. The “pause” of funding was mandated to start on Jan. 28 at 5 p.m.

The order put states in a precarious position even before the deadline, as it threatened to abruptly pause programs designed to help their most vulnerable citizens. State officials reported widespread issues and lack of access to systems used to administer essential programs including Medicaid, unemployment benefits, and Head Start.

Multiple lawsuits challenging the order were quickly filed, including one by a group of state attorneys general, citing immediate harm to their states as they could face the loss of funding essential to the health and safety of their residents.

On Jan. 29, OMB rescinded its Jan. 27 directive. But the White House press secretary made it clear that the recension does not affect the funding freezes in Trump’s executive orders. On Jan. 31, in the case brought by the attorneys general, a federal judge in Rhode Island granted a temporary restraining order against the funding pause. He cited the administration’s clear intent to implement the freeze of a wide range of federal financial assistance programs despite the official rescission of the OMB directive. Because the temporary restraining order is of limited duration, the court indicated it would set a briefing schedule for plaintiffs to seek further relief.

Here are some key takeaways about OMB’s directive and the impact on states:

• This order is not within the power of the Executive Branch. Congress, not the White House, is tasked with making decisions about federal spending. We have a system of checks and balances in place for this exact reason: to stop any one branch of government from exercising outsized influence.
• This will harm people, families, and communities across the country. The freeze was set to affect funding related to policy directives of the Trump administration set forth in recent executive orders. However, this also put thousands of seemingly unrelated state programs at risk, including school meals for low-income students and programs for homeless veterans.
• OMB’s January 27 memo suggested that certain programs would not be affected, specifically identifying Social Security and Medicare. A second memo issued the next day stated that additional specific programs including Medicaid, SNAP, Head Start, and student loans also should not be affected, but state officials have already reported loss of access to the systems used to execute some of these programs, causing widespread confusion.
• In their lawsuit, the state attorneys general called attention to a number of programs that would face concerning impacts from this directive, including:
  • Department of Health and Human Services grants to hospitals, community health and addiction treatment centers, and services for seniors and people living with disabilities — particularly in rural areas.
  • Medicaid funding, which Congress has directed the Executive Branch to distribute to states to provide healthcare for their poorest residents.
  • FEMA grants meant to support California residents and first responders as they respond to devastating wildfires, as well as funding promised to North Carolina to assist with hurricane recovery efforts.
  • Essential support for law enforcement programs, including to prevent hate crimes, address the opioid crisis, and combat violence against women and internet crimes against children.
  • Funding for foster care programs that provide stable homes for children.
• State attorneys general have work to do. They’re working to make people’s lives better, and to deal with the concerns that the people of their states elected them to address. They shouldn’t have to spend time fighting careless and unlawful orders from the president.
• This abrupt overreach of authority came without notice, leaving state leaders without the time and ability to ensure they can protect and care for people abandoned by the federal government through this directive.