Article updated on January 29, 2025
On January 27, 2025, the Office of Management and Budget (OMB) issued a memorandum to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance” (OMB Memo). The OMB Memo requires all Federal agencies to “identify and review all Federal financial assistance programs and supporting activities consistent with President [Trump’s] policies and requirements.”
It is unclear exactly what effect this temporary pause and review will have on K-12 public school funding. The United States Department of Education (DOE) reported that the Federal financial assistance received by K-12 public schools is on the list of programs for review. The temporary pause only applies to discretionary grants awarded by the DOE and will not impact Title I, IDEA, or other formula grants.
Federal regulations define “Federal financial assistance” as “assistance that recipients or subrecipients receive or administer” in the form of cooperative agreements, direct appropriations, food commodities, grants, non-case contributions or donations of property, and other financial assistance. 2 C.F.R. § 200.1. It also includes Federal assistance administered in the form of loans, loan guarantees, interest subsidies, and insurance. Assistance received directly by individuals is not considered Federal financial assistance for the purposes of the OMB Memo, and the OMB Memo does not impact Medicare or Social Security Benefits.
The OMB Memo requires that each agency pause:
- The issuance of new awards;
- The disbursement of Federal funds under all open awards; and
- Other relevant agency actions that may be implicated by President Trump’s executive orders.
During the temporary pause, each federal agency must undertake a “comprehensive analysis of all their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of President [Trump’s] executive orders.” The OMB Memo requires that, by February 10, 2025, all agencies submit to OMB detailed information on any programs, projects, or activities subject to the temporary pause. Additionally, the OMB Memo directs all agencies, for each Federal financial assistance program to:
- Assign oversight and responsibility to a senior political appointee to ensure Federal financial assistance conforms to the Administration’s priorities;
- Review pending Federal financial assistance announcements and modify unpublished announcements to ensure the Administration priorities are addressed, withdraw any announcements previously published, and, to the extent permitted by law, cancel awards already granted that conflict with the Administration’s priorities; and
- Ensure adequate oversight of Federal financial assistance programs and, when warranted, conduct investigations to identify underperforming recipients, and address any identified issues up to and including cancellation of awards.
On January 28, 2025, OMB issued a Questions and Answers (Q&A) document regarding the Federal financial assistance affected by the temporary pause. The Q&A clarified that the temporary pause does not apply to Federal financial assistance “across-the-board,” but is limited to programs, projects, and activities implicated by several of President Trump’s executive orders, including Reevaluating and Realigning United States Foreign Aid, Unleashing American Energy, and Ending Radical and Wasteful Government DEI Programs and Preferences. The Q&A also clarified that mandatory programs, like Medicaid and SNAP, were excluded from the temporary pause as were Pell grants, Head Start, and rental assistance.
However, prior to the temporary pause taking effect at 5:00 pm on January 28, a federal judge in the District of Columbia issued a brief administrative stay that preserves Federal financial assistance through Monday, February 3. Additionally, twenty-two (22) states, including the State of North Carolina, filed a lawsuit seeking an immediate temporary restraining order to prevent the temporary pause from taking effect. Updates will continue as additional information becomes available.
