The Trump administration’s plan to implement a sweeping freeze of federal aid sparked immediate confusion, uncertainty and downright panic among nonprofits, local governments and other groups, many of which provide aid and services to some of the most at-need residents in Southern California.
By mid-afternoon Tuesday, Jan. 28, a federal judge blocked the freeze, estimated to total trillions of dollars, just minutes before it was set to go into effect. U.S. District Judge Loren L. AliKhan, a Biden appointee, paused the freeze until Monday.
Even so, local organizations and lawmakers rushed Tuesday morning to make sense of what was initially a vague late-Monday memo from the Office of Management and Budget. That memo directed a pause of federal financial assistance “and other relevant agency activities” pending a review to ensure they do not conflict with President Donald Trump’s latest executive orders pertaining to “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology and the green new deal.”
“Members of Congress are scrambling to figure out what these orders mean and how we can protect our citizens from these earthquake moves,” Rep. Lou Correa, D-Santa Ana, said.
The Office of Management Budget — housed within the executive office, which oversees the president’s vision for budget management — later attempted to clarify just what would be impacted by the freeze.
The freeze would not apply across the board, OMB said in another memo to Capitol Hill and obtained by the Southern California News Group, and would not halt aid that “provides direct benefits to Americans,” including Social Security, Medicare, Medicaid and SNAP.
Despite that directive, several organizations reported disruptions on Tuesday to the portals where they would access federal funds. That included Head Start early childhood education programs in some states, as well as state Medicaid programs. (Karoline Leavitt, the new White House press secretary, acknowledged that there was an “outage” with the Medicaid website portal, but said no payments were affected.)
“Even though there’s a freeze on the funding freeze, throughout the day folks that have been trying to access the payment systems have been getting shut out,” said Louise McCarthy, president and CEO of the Community Clinic Association of Los Angeles County.
“We checked this morning and saw that we couldn’t access it. We draw funds in advance so we are not immediately affected, but if we can’t draw down funds for next month within a couple of weeks, that will be a big blow to us,” said Dawn Price, executive director of the Friendship Shelter, a nonprofit homeless services agency based in south Orange County that provides several services, such as shelter, housing navigation and outreach.
The Community Clinic Association represents health centers and clinics that serve 1 in 5 Los Angeles County residents, more than 2 million patients a year. The majority are considered low-income; 74% of the patients are below 200% of the federal poverty level.
“You could scrutinize these programs, certainly,” said McCarthy. “But health centers work very hard to be good stewards of public resources. They’re critical employers, they provide economic opportunities in the areas they serve. Negatively impacting these organizations negatively impact jobs.”
“If they wish to review whether or not folks are compliant, why potentially have a negative impact on the communities in the process,” McCarthy asked.
Price said there are 108 people in just south Orange County who live in units paid for with money from the U.S. Department of Housing and Urban Development who are at risk of losing their housing. And as much of 50% of the Friendship Shelter’s staff comes from similar federally funded programs, she said.
For the health centers in L.A., 12% of funding comes directly from the federal government, and that’s revenue used to pay salaries and serve patients. These are also health centers, McCarthy noted, that have been impacted by the recent catastrophic wildfires. Some have continued to cover organizational expenses and salaries while unable to open their doors and bring in other revenue.
“So very quickly, it could become a big emergency,” Price said.
“I think the one thing that everybody is seeking right now is clarity because there’s a lot of confusing information and a lot of uncertainty right now about exactly how things are going to unfold over the coming days, weeks, months, and the impact that could have to our community,” said Becks Heyhoe-Khalil, executive director of United to End Homelessness, Orange County United Way.
Jewish Family Service LA is a nonprofit that provides a range of social services, including serving nearly 3,000 seniors a year through its senior meal programs, about 250 women and 350 children through its domestic violence shelters and about 150 to 200 people annually through its homeless prevention program, Eli Veitzer, its CEO, said. Large portions of these programs are funded through federal dollars.
Depending on what, if any, long-term impacts the federal funding review will result in, Veitzer said it could force his organization to pause or eliminate services.
“The government relies on the nonprofit sector to be a service provider in so many areas, and we rely on the government to, if they sign a contract, to follow through and uphold the contract,” he said.
Veitzer said every president has a right to implement their vision “of how to serve American citizens.” But, he said, any changes should be made in a way that minimizes disruptions.
“The process needs to recognize that vulnerable individuals become dependent on services that they’re getting from nonprofits. … We need to have compassion for the people who receive these services and implement change in a way that recognizes the individuals and their humanity as change happens,” Veitzer said.
Vanessa Perez, executive director of the Inland Empire-based Time for Change, said the nonprofit organization that assists low-income individuals and families will still be able to provide services because of its diverse funding sources — but just how it goes about providing rent for the people the nonprofit services may look different and could put a financial strain on the organization down the road.
“What we’re going to have to do is pay out of pocket month after month until this clears up,” said Perez, “and we can get reimbursed from the government.”
Over the past year, Time for Change has provided housing support to more than 700 families annually, offering services such as rental assistance, housing navigation, or permanent residency, Perez said.
The Trump administration’s spate of executive orders has been quick, causing “chaos and confusion and, in many ways, panic” across the country, said Correa, the Democratic lawmaker.
“Two days ago, people were frightened about deportations. Today, it’s the average American who receives a Section 8 housing voucher worrying if they’re going to be OK, panicking because they don’t know if where they live Section 8 will be eliminated,” Correa said.
“A lot of change is coming to the country. Some well-intended, but some we have no idea what the impact is going to be.”
Notably, it’s not only Democrats concerned about the Trump administration’s move.
“We should continue to find ways to responsibly reduce federal spending, but cutting off certain programs that have already been funded by Congress creates new problems and causes confusion for Americans relying on these programs,” said Rep. Young Kim, a Republican who represents communities in Orange, Riverside and San Bernardino counties. “My office is closely reviewing the implications of this executive order, and we encourage any constituents to reach out if we can be of assistance.”
On Tuesday, a coalition of 23 Democratic attorneys general across the nation, including California Attorney General Rob Bonta, filed a lawsuit against the Trump administration, seeking a temporary restraining order to prevent the freeze.
In a media briefing, Bonta voiced particular concern over the potential impact on disaster relief for the recent wildfires in Los Angeles.
“FEMA funding is at risk, and we need it now,” he said.
According to an extensive document on the Council on Governmental Relations’ website, several federal financial assistance programs that fund fire relief are at risk of being blocked. These include the Assistance to Firefighters Grant, the Fire Management Assistance Grant and the Staffing for Adequate Fire and Emergency Response Grant — programs all managed FEMA.
In the meantime, local officials and groups are still grappling to figure out what the future holds for federal aid.
“Federal funding is very important for us,” said Anaheim city spokesperson Mike Lyster, who noted Anaheim receives more than $100 million each year in federal funding, which supports programs such as rent assistance through Section 8 vouchers and community development grants.
“We are trying to figure out what it means.”
Staff writers Jonathan Horwitz and Erika I. Ritchie and The Associated Press contributed to this report.