A federal judge in Washington, D.C., blocked an effort by the Trump administration to place a widespread freeze on federal grants and loans late afternoon Tuesday, Jan. 28, but not before confusion and outrage over the sudden move.
Minnesota was one of at least 22 states that filed suit in the wake of the bombshell action.
A lack of clarity over the extent of the freeze amid a series of memos prompted chaos for all levels of state and local government, health care providers, social services agencies and other nonprofit organizations as leaders scrambled to interpret the impacts.
The administration said the freeze would allow for a review of federal programs to ensure they’re aligned with President Donald Trump’s policies, such as “ending DEI, the green new deal, and funding nongovernmental organizations that undermine the national interest,” according to a memo from the federal Office of Management and Budget.
In a Tuesday afternoon news conference, a visibly furious Gov. Tim Walz stood beside Lt. Gov. Peggy Flanagan, Attorney General Keith Ellison and Erin Campbell, the commissioner of Minnesota Management and Budget.
“This is not bold. It's not leadership. It's stupid, buffoonish, childish, is exactly what they did,” Walz said.
“Child care providers across the state, law enforcement, our prisons, things that we count on, individuals on Medicare — [it’s] things that we know matter to people's lives. I want to be very clear about this. Minnesota is a state that pays far more into the federal government than we get back. Those are our dollars that he is stealing unconstitutionally.”
Campbell said the potential financial impact on the state could be as much as $850 million per month when not accounting for Medicaid, which the federal Office of Management and Budget later clarified is exempt from the freeze.
Hundreds of state employees are paid by federal dollars with hundreds more paid partially with grant funds. While individual assistance like SNAP and student loans appears to be exempted, grants to organizations that pass those dollars on through their own assistance programs are in doubt, if the funding freeze stands.
Ellison called the action deeply problematic and a clear violation of the Administrative Procedures Act, with broad swaths of funding streams impacted by the sweeping executive order.
“I do not sit around looking for ways to sue Donald Trump, but in the eight days that he's been in office ... he's forced me to figure out ways to sue him almost every day because of his violations of the rights of the people of Minnesota,” Ellison said. “We're never going to stop. We're always going to stand up for the people of this state.”
Local impacts
KOOTASCA Community Action had some disruptions Tuesday to its federal payment systems, said Marta Carrigan, interim executive director. KOOTASCA offers early childhood, housing and other community assistance programs in Itasca and Koochiching counties.
“We’re hoping to see those [disruptions] rectified so that we can continue to operate as normal,” Carrigan shared in an email.
In an interview with KAXE, she said emails were coming in “fast and furious” Tuesday, with new information by the minute.
They’ve prepared for government shutdowns before, but Carrigan said this feels very different, and there’s a lot of uncertainty.
“You worry about, just, the ripples of impact. It impacts staff, community members, clients; there’s just so many different layers and people that are impacted,” she said. “I think it leaves everyone feeling pretty vulnerable and just kind of worried for the health of the community.”
A memo sent Tuesday afternoon by the federal Office of Management and Budget said programs that provide direct benefits are excluded from the pause and review process, including Head Start early childhood programs and rental assistance.
But Carrigan was not sure about energy assistance programs that could be considered the type of environmental programs the administration wants to review.
“It is just so, so crucial to people that those programs aren’t delayed, because people depend on those to keep their heat on,” she explained.
Carrigan said KOOTASCA is working with its networks to determine how its other programs will be defined.
It’s also unclear what comes next for Department of Education grants provided to schools, especially as districts are preparing their budgets for the next school year.
Two Northern Minnesota superintendents told KAXE they’ve heard that major funding sources like Title I and special education won’t be affected. But those programs are listed for review in a memo from OMB, as well as those that fund food service, transportation and Indian and career and technical education.
“Obviously any funding freezes would be detrimental to our kids, but I don’t think anyone has any idea what this means yet for PreK-12 education,” said Chisholm Superintendent Mark Morrison in an email.
Walker-Hackensack-Akeley Superintendent Kevin Wellen said it could be weeks before they know the actual impact.
Nearly 20% of WHA’s revenue for the 2022-23 school year, the most recent data available, came from federal sources. That amount may still be inflated by COVID funds, and not all that funding is considered grants. But the federal portion of WHA’s budget is higher than most other districts in the region. Most are in the 2%-12% range.
Wellen noted the district has a fund balance to pay for two months' worth of costs.
“The thing I’ve learned with these decisions is to be patient,” he said. “Because not all of them are able to follow through.”
KOOTASCA’s Carrigan also said they can’t allow themselves to panic or get too worried.
“We need to keep the focus, keep working, maximize our efforts,” she said. “Just stay calm and do what we can with what we have.”
A huge variety of tribal programs were among those listed as under review in one of the memos issued Tuesday, including tribal youth and workforce development and the Indian Health Service Health Management Development Program. One area that appears under scrutiny is green energy-focused programming and projects.
The White Earth Nation’s Tribal Utility Commission is currently in the process of applying for millions of dollars in federal grants, a process that may be delayed, according to Director Nate Mathews.
Mathews said some of the grants are in partnership with the state, like for solar power at the Shooting Star Casino in Bagley and energy audit training at the White Earth Tribal College.
"The communication we've had from the Department of Energy ... just kind of said, ‘We're working with the new administration, we're going to need to just let you know, some of the communication may be delayed from our office,’” Mathews said.
With the flurry of executive orders and a lengthy list of priorities for this new administration, Mathews expressed some concern about the viability of some projects and emphasized the need to follow guidance from federal grant officers.
"It's just going to take people some time to sort them through and communicate with their federal staff and their local staff that administer the dollars,” Mathews said. “It's going to take some time to wade through all these executive orders.”
U.S. Senator Tina Smith described the order as “devastating" for Minnesota’s tribal nations and Native communities, and many essential programs — like health care, food assistance, public safety and education — are required by treaty between tribal nations and the federal government.
“My office is in direct communication with Tribal leaders and Native organizations in Minnesota to understand the impacts and violations of treaty and trust commitments to Indian Country,” Smith said in an emailed statement. “It’s unconscionable that the President would harm people like this. And I am going to fight this because it’s an outrage.”
