The Trump administration rescinded a sweeping freeze on federal grants and loans on Wednesday, Jan. 29, just two days after the freeze was announced and less than a day after it was temporarily blocked by a federal judge.
The whiplash of activity plunged social services and organizations receiving federal funding into chaos. Even after the freeze was rescinded, agencies and organizations in D.C. and around the country expressed uncertainty over their futures.
Roughly a quarter of D.C.’s budget comes from federal grants, amounting to more than $5 billion a year. These funds go toward programs that support residents’ access to healthcare, education, housing, and more.
About two-thirds federal grant payments to D.C. go toward Medicaid, which helps provide health coverage to low-income people. On Tuesday, Medicaid made headlines as one of the primary programs that could be affected by the funding freeze, though the White House later denied that the change would impact the program. Without federal funding, D.C. would not have the funds to support its Medicaid program as it currently stands.
“States are not in a position to foot the bill for Medicaid. Even if your state’s really well-run fiscally, you can’t have your budget jump by 20% overnight and be able to keep on doing what you’re doing,” David Super, a professor at the Georgetown Law Center, said.
Medicaid provides health coverage to 76 million Americans, including almost 240,000 residents of D.C., or about 35% of the District’s population.
The original memo announcing the funding freeze, released by the Office of Management and Budget (OMB) on Monday, said that the freeze would not apply to programs providing direct payments to individuals. Medicaid provides funding to states and D.C., which then make payments to hospitals, care facilities, and medical providers, meaning the program does not involve the direct aid payments to individuals that were explicitly exempted.
Later, a White House fact sheet released on Tuesday said that Medicaid was excluded from the freeze. However, online portals for Medicaid payments appeared down around the country, even before the order was slated to take effect at 5 p.m. Tuesday, leading to widespread confusion.
Beyond government programs like Medicaid, D.C. community organizations receiving federal funds to provide services ranging from housing assistance to education programs worried that their work would be affected.
A Tuesday press release from the DC Coalition Against Domestic Violence (DCCADV) obtained by the Voice expressed fears that programs supporting survivors of domestic violence would be impacted. The press release cited federal funding for agencies such as the Office on Violence Against Women and the Office for Victims of Crime.
“Nearly $40 million dollars of support services for survivors, including domestic violence housing, legal representation, and mental health care, hang in the balance while their lives are at stake,” the press release read. “This kind of freeze would have an immediate and concerning impact on domestic violence services in the District.”
On Wednesday, Dawn Dalton, executive director of DCCADV, told the Voice that federal support for services for survivors seems uncertain going forward, even after the funding pause was rescinded.
“While we are pleased with the announcement that the federal funding freeze memo was rescinded, we know that federal funding and services for survivors in particularly vulnerable populations remain at risk,” Dalton wrote in a statement to the Voice. “These services are life-saving and we will advocate for them at every turn.”
Super emphasized that community organizations that rely on federal funding can be even more affected by sudden changes like this than state-run government programs.
“For some entities—states—they may be able to last a little while, not without Medicaid money, but maybe without some of the smaller programs. But the grassroots charities, they’ve got nowhere to go,” Super said.
Super cited organizations providing services to people experiencing homelessness as an example.
“These programs are running on a shoestring, and they’re dealing with extremely vulnerable people in very vulnerable situations,” Super said. “You can’t tell a young person who’s been thrown out of their family house and is on the street, ‘We’ll get back to you next month.’ That doesn’t work.”
A statement from the National Low Income Housing Coalition (NLIHC), which is based in D.C., echoed these concerns about housing services.
“Even a short pause in funding could cause significant harm to low-income families and their communities,” Renee Willis, NLIHC’s interim president and CEO said in the statement. “The longer the freeze continues, the greater the risk that low-income households receiving federal rental assistance could face eviction, and in the worst cases, homelessness, homeless shelters may be forced to close their doors, and nonprofit organizations may have to lay off staff.”
Even with the rescission, Super emphasized that the confusion and paused funds have already had immense impacts, possibly even causing layoffs and service delays in organizations relying on federal funding.
“Even if the rumors were true, that they pulled the memo back, you already had real harms,” Super told the Voice on Wednesday, shortly after the rescission. “We had a bunch of people laid off, and a bunch of services not provided on this basis.”
On Wednesday, White House Press Secretary Karoline Leavitt tweeted that while the original OMB memo was rescinded, the funding freeze itself was not. The statement adds to the confusion as social services and community organizations wonder if another memo or further changes to funding are coming.
The legal debate around the freeze remains unresolved. On Tuesday evening, a U.S. District judge had already temporarily blocked the funding pause, and D.C. joined 22 states in suing the Trump administration over the order.
“The Administration’s sweeping order and subsequent attempts to clarify have sown immense chaos and confusion, causing many District residents to fear for their health and safety. As it stands, the order is illegal and unconstitutional,” D.C. Attorney General Brian L. Schwalb wrote in a statement to the Voice on Wednesday morning, before the memo was rescinded.
The funding freeze involves complicated laws and constitutional questions related to federal spending. Super said that the freeze is just one part of a flurry of legally questionable executive orders and other actions from the Trump administration. He cited Trump administration orders on foreign aid, climate change, immigration, and more.
“It’s not that they think they’re going to be found correct on these things,” Super said. “They know these things are illegal, but they’re trying to do so many illegal things at once and so many destructive things at once that neither their opponents nor the courts can process it all.”
