Trump’s federal funding freeze leads to confusion, concern among Alabama agencies, nonprofits

by Alander Rocha, Alabama Reflector
January 28, 2025

President Donald Trump’s freeze on federal assistance created confusion and concern Tuesday among state agencies and nonprofits that depend on federal money for operations.

A spokeswoman for the Alabama Medicaid Agency said Tuesday that the agency appeared to have been locked out of its federal funding portal, though it was restored later in the day.  The Alabama State Department of Education said that at least some of its discretionary funding had been affected.

In a memo dated Monday, the White House’s Office of Management and Budget (OMB) announced a freeze on all federal financial assistance, including grants and loans. The move affected both state programs and nonprofits that depend on federal funding for programs.

The United Way of Central Alabama said in a statement Tuesday that it was “carefully evaluating” what the move meant for programs it supports — “whether it’s housing for veterans experiencing homelessness, meals for homebound seniors or support for parents raising children.”

“The federal grants we receive are crucial for services we provide in the community, and without this cash flow for an undetermined amount of time, both we and our network of funded partner agencies could face significant operational risks,” the statement said. “This freeze also jeopardizes the financial security and stability of the families who depend on these much-needed community services.”

The memo also led to widespread confusion about what the freeze meant for Medicaid, a federal program serving poor and low-income Americans. In Alabama, Medicaid covered about 1 million people – nearly 20% of the population – in 2022 and paid for more than half the births in the state. The program, considered critical for health care in Alabama, gets about 73% of its funding from the federal government.

A footnote attached to the OMB memo said it should not be “construed to impact Medicare or Social Security benefits” but did not mention Medicaid.

A separate memo from OMB on Tuesday morning said “In addition to Social Security and Medicare, already explicitly excluded in the guidance, mandatory programs like Medicaid and SNAP will continue without pause.” But White House spokeswoman Karoline Leavitt said Tuesday she was not certain about whether Medicaid was affected, according to ABC News. State Medicaid programs around the country reported difficulties accessing a federal funding portal.

“It is our understanding that access to the portal has been halted temporarily, and we are currently awaiting guidance from CMS,” Melanie Cleveland, a spokesperson for the Alabama Medicaid Agency, said Tuesday morning.

Later that day, Cleveland said “the Centers for Medicare & Medicaid (CMS) Payment Management System is now accessible.”

U.S. Rep. Terri Sewell, D-Birmingham, demanded in a post on X, formerly known as Twitter, that the administration to restore access to the portal on Tuesday afternoon.

“More than 1 million Alabamians rely on Medicaid along with the providers, hospitals, & clinics that serve them. The Trump Administration needs to restore it NOW!” Sewell posted.

Eric Mackey, Alabama’ state schools superintendent, said in a statement Tuesday that they did not believe the OMB memo “affects formula-driven programs like Title I and IDEA.” Title I provides supplemental financial assistance to school districts for children from low-income families. IDEA ensures that students with disabilities receive a free education.

“We are working closely with other state and federal agencies to secure any funds necessary to continue normal daily operations without interruption. Some discretionary grant funds will be affected,” the statement said.

A separate memo from OMB lists off the programs that will be paused temporarily while it reviews which federal spending it deems appropriate, which includes higher education grants and the Pell Grant program. The U.S. Department of Education, however, said that financial aid and student loans would not be impacted, according to CNBC. 

The Appalachian Regional Commission, an economic development partnership between the federal government and states, has also been affected by the order to freeze federal dollars.

“The ARC is complying with the pause order from OMB, and we have been communicating with OMB and working to provide them with the information they need to assess ARC’s programs and grant opportunities,” said Janiene Bohannon, communications director for the Appalachian Regional Commission.

She added that until the organization “is pausing” until it learns more from the Office of Management and Budget about the next steps.The organization operates in 37 counties in Alabama, which comprises the northern part of the state, but goes as far south as Macon County.According to the list provided by OMB, the Appalachia Regional Commission has five programs affected by the order.

Just about all the programs relate to economic development, which include the Appalachian Development Highway System funding program.

Organizations filed a lawsuit in federal court Tuesday ahead of the temporary pause taking effect. Senate Minority Leader Chuck Schumer said Tuesday morning that he’s spoken with New York State Attorney General Letitia James about a legal challenge.

Mackey cautioned against getting distracted amid a “flurry of activity” that makes “some of our educators uneasy.”

“In short, just keep having school. Let’s stay focused on teaching and learning. I assure you that we are staying on top of the situation and will pass along information as we get updates,” Mackey said.

Ralph Chapoco contributed to this report.

This story was updated at 4:37 p.m. to reflect that the federal funding portal for the Alabama Medicaid Agency became accessible late Tuesday afternoon.

Alabama Reflector is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Alabama Reflector maintains editorial independence. Contact Editor Brian Lyman for questions: info@alabamareflector.com.

The post Trump’s federal funding freeze leads to confusion, concern among Alabama agencies, nonprofits • Alabama Reflector appeared first on alabamareflector.com