Update on the Issue of Federal Funding

February 04, 2025

An update from ANCOR:

“At a hearing on the initial restraining order yesterday, the judge granted a second motion for a temporary restraining order which prohibits the Trump administration from implementing, giving effect to, or reinstating under a different name the directives in the OMB memo with respect to Federal funds under all open awards.

The order also requires the Trump administration to give notice to all agencies instructed within the memo that they may not take any steps to “implement, give effect to, or reinstate under a different name the directives in [the OMB memo] with respect to the disbursement of Federal Funds under all open awards.” The Trump Administration is further required to file a status report on and meet with the parties to propose a briefing schedule on or before February 7.

With how quickly the OMB memo was released, rescinded, and enjoined last week, we thought it may be helpful to offer a brief timeline:

• Last Monday, January 27, the Office of Management and Budget (OMB) issued a memo instructing all federal agencies, to the extent permissible under applicable law, to “temporarily pause all activities related obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”  At the time of distribution, the memo was unclear as to whether Medicaid and similar programs would fall within its scope.
• ANCOR issued a rapid response action alert for our members urging them to reach out to their congressional representatives and ask for clarity around the memo’s impact on Medicaid I/DD services. Our action alert generated 9,187 messages to Congress requesting clarity on the impact of this freeze on people with disabilities, the workforce, and payments to providers for people with I/DD.
• On Tuesday, January 28, OMB issued instructions to Federal agencies pursuant to the memo which included a spreadsheet with Federal programs that were subject to the review and the instruction to add additional lines to include any programs not listed. This was followed by a Q&A document clarifying that “any program that provides direct benefits to Americans is explicitly excluded from the pause and exempted from this review process. In addition to Social Security and Medicare, already explicitly excluded in the guidance, mandatory programs like Medicaid and SNAP will continue without pause.”
• Later that same day, a federal court issued a temporary stay on the federal funding freeze for open awards and current spending until February 3.
• On Wednesday, January 29, OMB withdrew the memo with a simple rescission statement. However, later on that same day, Press Secretary Karoline Leavitt posted to X, “[t]his is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo. Why? To end any confusion created by the court’s injunction. The President’s EO’s on federal funding remain in full force and effect, and will be rigorously implemented.”
• On Friday, January 31, a separate federal judge issued a similar restraining order dictating that the Trump administration cannot “pause, freeze, impede, block, cancel, or terminate” taxpayer money already allocated by Congress in the 22 states that brought the suit and the District of Columbia.
• Yesterday, February 3, the first federal judge issued a second, more comprehensive, temporary restraining order preventing the Trump Administration from acting on the funding freeze directives outlined in the memo or reinstating it under a different name.”

ANCOR will keep us updated as they learn more. If you are experiencing any disruptions in payments pursuant to one of the executive orders or following the directives to OMB last week, please reach out to me at jennifer@vnppinc.org  and I will share with our national partners.