In response to the growing number of questions regarding the federal government grant funding pause, the Office of the State Controller has compiled a comprehensive list of answers to provide clarity and guidance. Due to the uncertainty and continued changes, the OSC will continue to update these FAQs as more information is available.
Question: What is the current status of the federal grant funding pause?
Answer: On Monday, Jan. 27, the federal government issued OMB Memorandum M-25-13, pausing the disbursement of all grant funds through at least February 10, 2025. However, this directive was later rescinded by OMB Memorandum M-25-14. Despite this, the White House has indicated that the underlying executive orders remain in effect, meaning further federal action may still impact grants.
On Friday, January 31, a Federal Court in Rhode Island issued a Temporary Restraining Order (TRO) stating that Federal agencies cannot pause, freeze, impede, block, cancel, or terminate an awards or obligations on the basis of the OMB Memo, or on the basis of the President’s recently issued Executive Orders. This Order will remain in effect until there is a full hearing on the issues.
Question: Does the attempted pause affect grants that have already been awarded and are in progress?
Answer: Yes. The original order included grants that had already been awarded and where work was already moving forward. Although the directive has been rescinded and a TRO is in place, it is unclear what further action the federal government may take.
Question: How does this affect grants awarded by the State of Colorado?
Answer: Grants awarded by the State of Colorado that are funded by federal grants may be impacted by further federal action. The State is closely monitoring the situation and evaluating its options to ensure that the federal government meets its funding commitments.
Question: What legal action has been taken against the federal directive?
Answer: The State of Colorado, along with 21 other jurisdictions, has challenged the OMB directive in court. On Friday, January 31, a Federal Court in Rhode Island issued a Temporary Restraining Order (TRO) stating that Federal agencies cannot pause, freeze, impede, block, cancel, or terminate an awards or obligations on the basis of the OMB Memo, or on the basis of the President’s recently issued Executive Orders. This Order will remain in effect until there is a full hearing on the issues.
Question: What should grant recipients do in response to this uncertainty?
Answer: Given the uncertainty surrounding federal funding, the State encourages grant recipients to:
- Incur only expenses critical to maintain the continued day-to-day operation of their programs.
- Monitor communications for further updates from the State and federal agencies.
Question: Will the State of Colorado continue paying out federally funded grants?
Answer: The State of Colorado intends to honor its payment obligations for federally funded grants as long as the federal government continues to provide the associated funds.
Question: How will the State keep grant recipients informed?
Answer: The State is actively monitoring developments related to federal grant funding and will provide further updates as more information becomes available. Additional follow-ups will be shared as soon as they are available.
Question: Does the Grant Letter apply only to federal grantees, or does it also apply to grantees receiving state grants that are partially funded with federal dollars?
Answer: The Grant Letter applies to all grants that include any federal funding, regardless of whether they are federal grants or state grants supplemented with federal dollars.
Question: Does this memo apply to state grant funds?
Answer: No, this relates only to federal grant funds, per the Presidential Executive Orders and OMB Memorandums provided in the OSC Memo.