‘Callous, craven, and careless’: Delaware and other states brace for federal funding cuts as Trump admin drops directive

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This story was supported by a statehouse coverage grant from the Corporation for Public Broadcasting.

Delaware and dozens of other states asked a court Wednesday to stop President Donald Trump’s administration from freezing federal spending going to states and nonprofits.

Trump’s Monday order temporarily paused most federal assistance to states while his administration planned to conduct an across-the-board ideological review to uproot progressive initiatives. It prompted two lawsuits, one by nonprofits and another by a coalition of states, including Delaware and New Jersey.

U.S. District Judge Loren L. AliKhan blocked the funding freeze only minutes before it was scheduled to take effect in the lawsuit brought by nonprofit organizations. The administrative stay was set to last until Monday afternoon. Another court hearing was scheduled that morning.

The White House press secretary said on social media that the memo was rescinded to make the court case go away, but the federal review of spending would continue.

A spokesman for Delaware Attorney General Kathy Jennings said rescinding the memo will not affect the states’ legal challenge.

“This is good news but it’s still too early to declare victory,” the AG’s communications director Mat Marshall said. “Given that this is a voluntary policy rescission by the administration, and not an enforced stay or a disavowal of policy, Delaware and the coalition of plaintiff states will forge ahead with our hearing today.”

The Trump administration is arguing the case is now moot.

State and local officials walked into an honorary swearing-in ceremony for Congresswoman Sarah McBride Tuesday night in Wilmington voicing relief after the stay was issued by a U.S. district judge in the first case.

The order, issued less than two days ago, catapulted Delaware officials and nonprofits into a state of panic and confusion all day Tuesday.

Delaware and other states had already begun to feel the effects of the directive issued by the U.S. Office of the Management and Budget, even though the White House said Monday certain programs and direct payments to individuals would not be affected and would not take effect until 5 p.m. Tuesday.

For example, state officials were unable to access the Medicaid payment portal for hours Tuesday and a message from the agency that manages Head Start said the payment portal for Head Start, a federally funded program that prepares children from birth to age 5 for school, was not working.

“[I] woke up [at] 2 a.m. in the morning to a flood of text messages indicating that our state was losing somewhere in the neighborhood of $11 billion, with a ‘B,’ of federal funding that immediately had ceased,” Gov. Matt Meyer said at Tuesday’s ceremony. “Something like $260 million in accounts receivable, money that the federal government owes us that was being stopped immediately by the pen of a single person.”

The administration clarified Tuesday afternoon that Medicaid and Head Start were not programs intended to be affected by the directive.

Attorney General Kathy Jennings said she had joined the lawsuit to make sure that Delawareans and the state of Delaware are protected, taken care of and not cut off from necessary federal funding.

“This order was callous, craven and careless,” Jennings said. “The White House is toying with people’s lives and livelihoods — including millions of Americans who voted for Donald Trump. We’re not going to stand by and wait to see what kind of havoc the president wants to wreak.”

Delaware Health and Human Services Secretary Josette Manning told a state Senate committee Wednesday that her agency is going through each division, identifying programs that get federal funding and determining priorities. She said hundreds of positions are federally funded and the department draws down $10 to $20 million from the federal government every week.

“For instance, one of the programs, LIHEAP, which is the low-income heat and energy program, is 100% federally funded,” she said. “If that program’s cut, that’s about $750,000 a month that we as a state would have to consider in order to continue to provide those services.”

McBride, along with Sens. Chris Coons and Lisa Blunt Rochester, spent Tuesday talking with nonprofits who were wracked with fear and worry about possible financial devastation if they lost federal funding.

“We heard from dozens and dozens of nonprofits across the state that receive some level of federal funding for the services that they’re providing Delawareans in areas of housing and youth support, as well as homelessness and health care,” McBride said. “So there would be significant consequences, even in its most limited form, for those organizations and for the Delawareans that work for them and rely on them, because in many cases, they’re operating on very slim budgets.”

Sheila Bravo, executive director of the Delaware Alliance for Nonprofit Alliance, said the order caused a lot of confusion for nonprofits. She said many may lose the ability to operate if they lost federal funding.

“Many nonprofits have different streams of funding, but particularly in Health and Human Services and in education, they’re primarily funded through government programs, and a lot of that funding is sourced at the federal level,” Bravo said. “Often these grants or contracts are reimbursable, which means that the nonprofit has to spend the money first and then gets reimbursed for it, which means they’re already putting a lot of money out to do the work, and if they don’t get reimbursed, they may not necessarily have the cash to continue.”

McBride held the honorary swearing-in ceremony as the state’s lone at-large U.S. representative for local supporters. She took the official oath of office in Washington, D.C. on Jan. 3.

In her remarks to the audience, she said the current state of politics shows there’s real pain in both red and blue areas across the country.

“We have seen a breach of trust between the public and our government and between one another,” she said. “While it has only been a short time since Delawareans entrusted me with the responsibility of representing them, I have already seen enough to believe more deeply than ever that Delaware, once again, must play a critical role in restoring that trust. That it is in our values as a state of neighbors that we find the antidote to the division in our democracy, that the ethos of our small state can end the smallness of our politics.”

McBride has already been the target of personal attacks by other members of Congress because of her gender identity. Congresswoman Nancy Mace introduced legislation that would bar transgender women from using women’s restrooms and other facilities on federal property.

House Speaker Mike Johnson later issued a statement dictating that House policy would ban transgender women from using facilities — like bathrooms and locker rooms — that do not correspond with the sex they were assigned at birth. Delaware Republicans invited Mace to speak at an event in Newark earlier this month.

The Associated Press contributed to this report.