Paused pause? Michigan reeling from potential threat to federally-funded programs
Paused pause? Michigan reeling from potential threat to federally-funded programs
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Donald Trump paused some federal assistance programs. Here's why.
Donald Trump's administration paused federal assistance programs in order to ensure they align with his policies and spending goals
A move by President Donald Trump's budget office to at least temporarily halt federal aid to programs produced profound uncertainty on Tuesday, drawing condemnation from Democratic members of Michigan's congressional delegation and prompting the state's top law enforcement officer to threaten legal action.
By the end of the day, the freeze on federal payments was at least temporarily delayed by a federal judge in Washington in response to a lawsuit from nonprofits, as the courts and those affected try to determine just what the memo means and if it passes constitutional muster at least on its face.
But that did little to clear up the confusion.
The federal Office of Management and Budget's (OMB) memo issued Monday ordered agencies to pause payments on grants, loans and other forms of federal assistance covered by Trump's recent spate of executive orders, including those covering programs related to gender, energy and the environment, and diversity and equity policies beginning at 5 p.m. Tuesday, according to a copy seen by Reuters. But it appeared to some to potentially go further since Trump's orders touched on myriad issues including government efficiency and declared emergencies in areas of border security and energy. The memo also ordered a review of federal payments "consistent with the president's policies and requirements," which could have been interpreted as going beyond those orders, since more continue to be issued.
For many, it initially raised fears that other programs − including those serving nutrition or health care needs for poorer individuals or families − might be impacted. White House Press Secretary Karoline Leavitt on Tuesday afternoon said that no individual assistance would be compromised but still left unclear just how widespread the funding freeze might be.
University of Michigan public policy professor Donald Moynihan described the memo, which was vague as to its scope, as highly unusual. "The pause on funding represents what amounts to a self-imposed government shutdown for a very large part of the government, featuring an extraordinary degree of uncertainty," he said.
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A chorus of Michigan Democrats blasted the directive as illegal, decrying it as a usurpation by the executive branch of Congress' spending power. "The Trump administration's unilateral move to block thousands of federal programs is clearly unlawful. This isn't a wonky, Washington conversation – there are real, actual effects that will harm Michigan and put a hold on federal dollars that were already awarded," said U.S. Sen. Elissa Slotkin, D-Holly, in a statement.
Others confirmed it had caused widespread confusion, with organizations that receive federal aid reaching out for any clarity as to if, how and when their funding might be affected. "My phone has not stopped ringing," said U.S. Rep. Debbie Dingell, D-Ann Arbor. "People don't know what this means."
Republicans, however, defended the freeze, saying in some cases its scope had been exaggerated. "The pause was never across-the-board," U.S. Rep. Lisa McClain, R-Bruce Township and a top member of House Republican leadership said in a post on social media platform X. "This was fearmongering. President Trump rightfully has everyone talking about reexamining our country's spending priorities. We are trillions in debt."
The Trump administration directive already faces at least one legal action. Groups representing nonprofits and small businesses filed a lawsuit challenging OMB's directive in federal court in Washington, D.C., according to reporting from USA Today. More challenges could follow.
Michigan Attorney General Dana Nessel said Tuesday she'd pursue a legal fight after receiving reports that programs — including Medicaid and Head Start — were impacted by the Trump administration's move.
Leavitt said Tuesday afternoon at her first briefing with the media that there is "no uncertainty" in the administration about what the instructions from OMB mean. "This is not a blanket pause on federal assistance and grant programs from the Trump administration," she said. "Individual assistance … assistance that is going directly to individuals, will not be impacted by this pause."
Still, the Trump administration's funding pause could reverberate across Michigan, affecting state, local and nonprofit programs and services that rely on federal support, stakeholders said Tuesday.
Potential impact to state programs 'huge'
In state government, the freeze could potentially impact spending on a Michigan Department of Transportation program to support minority subcontractors, which accounted for $117.1 million in spending in 2024 but which MDOT officials said Friday they did not believe had been impacted by Trump's executive orders. The freeze could also potentially impact, at a minimum, any state grants related to diversity and equity programs, grants in support of refugees seeking asylum, and programs related to solar or wind energy or electric vehicles.
Michigan's 2025 budget totals about $81.2 billion, of which just under $33.9 billion, or 42%, comes from the federal government, according to the House Fiscal Agency. But not all of that federal money has been paused.
By state agency, the biggest recipients of federal funding are the Department of Health and Human Services ($26.6 billion); the Michigan Department of Transportation ($2.3 billion); School Aid ($2.3 billion); and the Department of Labor and Economic Opportunity ($1.2 billion). Next are the Department of Lifelong Education, Advancement and Potential ($505.4 million) and the Department of Environment, Great Lakes, and Energy ($463.8 million).
"The potential impact is huge," said Bob Schneider, a senior research associate at the Citizens Research Council of Michigan, though he also noted the freeze might apply to a more limited range of discretionary spending programs.
Michigan's State Budget Director Jen Flood underscored the importance of state funding in a statement Tuesday. "Federal funding is critical to protecting the health and safety of all Michiganders—ensuring drinking water is clean and food is safe, keeping people in their homes and the power on, and funding homeland security and emergency management," she said.
Michigan universities assessing change
Universities across the state collectively receive millions in federal research grants, according to data compiled by the National Science Foundation. The University of Michigan alone received more than $1 billion in federal money last year. At Michigan State, federal grants topped $435 million. Wayne State received about $135 million, and Michigan Technological, Central Michigan and Western Michigan universities also received grants.
Several of the schools said they were aware of the order. "The university is in the process of reviewing the impact of executive orders and the pause in federal funding on the institution, and therefore we are unable to specifically comment on this directive," MSU spokeswoman Kim Ward Sutton said in a statement.
CMU President Neil MacKinnon told staffers in a note that the school was working with other schools and consultants to interpret the orders correctly. "At present, CMU is not required to make any immediate changes to comply with the new executive orders," MacKinnon said in a note also signed by Interim Provost Paula Lancaster and Shawna Patterson-Stephens, vice president for inclusive excellence and belonging. "There is currently no need to cancel previously planned programs and activities, nor to make changes to curriculum."
Nonprofits in 'liminal space'
Michigan nonprofit leaders representing organizations working on a range of issues from refugee services to mental health said Tuesday they face uncharted territory.
Michigan Nonprofit Association (MNA) President and CEO Kelley Kuhn blasted the decision to pause federal funding allocations, saying the stoppage would affect a myriad of services for residents. It's not immediately clear how many Michigan nonprofits receive federal funding through the state's budget, the group said. "This reckless action by the administration could have serious consequences for nonprofit organizations and the people they serve," Kuhn said in a statement.
Joshua Traylor, executive director of the University of Michigan's nonprofit Center for Health and Research Transformation (CHRT) said it's not unusual for a pause in grant activity and communications to accompany a change in the federal administration as new political appointees take charge. "I think what is challenging with this announcement is the breadth," Traylor said. In general, he described the move as creating deep funding uncertainty for organizations. "You know it's a bit of a wait-and-see," Traylor said.
Common Ground — a non-profit crisis services agency in Michigan — receives programming funds mostly through state and local sources, according to Chief External Relations Officer Jeff Kapuscinski. But the organization operates resiliency centers in communities impacted by mass shootings, including East Lansing, Oxford and Rochester Hills supported by the state through federal grant funding from the Antiterrorism and Emergency Assistance Program. It's not clear whether the centers could be affected by the funding freeze, Kapuscinski added.
The Refugee Education Center, a Grand Rapids-based nonprofit that provides educational services to refugee families in west Michigan, plans to continue operations despite the funding freeze, said Executive Director Meg Derrer. That programming includes early childhood programs, after-school programs for K-8 students and post-education transition planning programs for high school students.
The nonprofit is a recipient of the Office of Global Michigan's School Impact Grant, the funding for which Derrer said stems from federal dollars allocated through the Office of Refugee Resettlement.
The funding freeze, coupled with cancellations of flights for refugees already approved for resettlement in the U.S. last week, has created uncertainty for refugees and nonprofit organizations that help them navigate new communities, including in Michigan.
"We're living in a very liminal space, and it's very difficult," Derrer said.
Contact Clara Hendrickson at chendrickson@freepress.com or 313-296-5743.
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