Confusion among NYC agencies and universities after Trump tries to pause funding

A vague memo issued Monday by the Trump administration’s budget office directing agencies to freeze federal funding is fueling confusion about the move's immediate and long-term potential effects on housing, scientific research, nonprofit organizations and a range of other programs across New York City and the region. Adding to the uncertainty, a federal judge temporarily blocked the directive late Tuesday afternoon, just before it would have gone into effect.

The memo would place a “temporary pause” on funding and instructs federal agencies to “complete a comprehensive analysis of all of their federal financial assistance programs” to see if any violate recent executive orders, including rules related to climate change, transgender rights or diversity.

In response to the confusion, the White House later issued a clarification on the memo, stating that the pause did not apply to direct benefits such as food and housing assistance, Medicaid and payments to farmers, small businesses and similar programs. 

New York City’s current fiscal year budget includes $9.6 billion from the federal government, according to an analysis by the city comptroller’s office.

Hours before the order was set to take effect, Mayor Eric Adams said city officials were still trying to determine how the move might affect 8.3 million New Yorkers.

“We are in touch with our federal counterparts as we continue to monitor this situation closely, and we will advocate firmly on behalf of New Yorkers whose lives are impacted by affected programs,” said Adams, a Democrat who has steadfastly refused to criticize Trump and his decisions thus far.

The memo explicitly states Medicare, Social Security and "assistance provided directly to individuals" will not be affected.

Senate Minority Leader Chuck Schumer, a New York Democrat, denounced the directive in comments on Tuesday.

“The blast radius of this terrible decision is virtually limitless,” Schumer said. “It’s American families who are going to suffer most.”

NY Gov. Kathy Hochul issued a statement on Tuesday saying she would be "working with Attorney General Letitia James on new litigation to ensure these funds are delivered." New Jersey officials have vowed to fight the funding freeze as well.

Uncertainty for housing programs

In response to the directive, housing experts worried about what a funding freeze would mean for the federal Section 8 program, which more than 100,000 New York City households use to pay the rent.

Even a short suspension could have a chilling effect on the program because it relies on landlords who accept the rental assistance based on the premise that they will be paid on time each month without interruption.

“Anything that undermines the public-private partnership at the core of the program is really harmful in the long run,” said Sarah Saadian, senior vice president of the National Low Income Housing Coalition. “They rely on private landlords who are willing to participate and provide housing and if the federal government continues to freeze funding or have government shutdowns or makes it unreliable to participate, [landlords] are not going to do it.”

The federal government also provides billions of dollars in funding to the New York City Housing Authority and millions that the city uses to pay housing inspectors.

A NYCHA spokesperson said the authority is still trying to determine the potential impact of a funding freeze.

Rachel Fee, executive director of the affordable housing advocacy group New York Housing Conference, said even a dayslong suspension would be a “destabilizing maneuver” harming low-income tenants. She said any long-term cuts to rental assistance programs could lead to evictions and hurt landlords who need the money to pay their own bills and maintain their buildings.

“This is an irresponsible action,” Fee said. “New Yorkers rely on these programs and expect the government to function on a basic level and this chaotic disruption only hurts the people who need it the most.”

The federal Department of Housing and Urban Development, which oversees rental assistance, home loans and public housing nationwide, did not respond to questions about the breadth of the proposed funding freeze.

Nonprofits have also been scrambling to learn how the directive could affect their programs. Kristin Miller, whose organization Homeless Services United represents nonprofit providers, said organizations Tuesday were receiving notices from federal agencies, like the Department of Housing and Urban Development, notifying them that their funding would be suspended.

She said the organizations tried contacting local HUD field offices for more information but weren’t receiving clear guidance.

“We’re on a fact-finding mission but you can’t even make a decision because we don’t even know what the facts are,” Miller said Tuesday. “Keep calm and plan but know this is going to be changing moment by moment.”

The online Medicaid payment portal was also down Tuesday, though White House Press Secretary Karoline Leavitt said in a post on X that “no payments have been affected” and they expected to reopen the portal “shortly.”

Federally funded research

The Trump administration’s directive, along with executive orders issued during his first week in office, would also affect researchers at top universities in and around New York City who rely on federal funding.

In an email Monday addressed to “all recipients of federally funded sponsored projects,” NYU Provost Georgina Dopico and Chief Research Officer and Vice Provost for Global Research and Innovation Stacie Bloom warned of “concerning recent developments regarding federal awards” including two grants “terminated” by the Department of State.

“The only reason given in each instance is that ‘the award does not meet the agency’s priorities,’” the administrators wrote in the email obtained by Gothamist. “These are perplexing and unsettling circumstances.”

Rutgers University Executive Vice President and Chief Financial Officer J. Michael Gower sent an email to all students and faculty that the school is “committed to ensuring your uninterrupted academic journey” even if there is a pause in financial aid payments.

Gower advised researchers that they “should not stop working on any sponsored awards” until they have spoken with a university grant specialist and share any communications from federal agencies with Rutgers.

“The university has contingency plans in place to deal with the pause in payment,” he wrote in an email shared with Gothamist.

This is a developing story. It was updated after a federal judge's ruling placed the Trump administration's directive on hold and after the White House issued clarification on the memorandum.