Debbie Brinson, CEO of Honor Community Health details the impacts of President Donald Trump’s federal funding pause before the Michigan Senate Oversight Committee on March 5, 2025. | Screenshot
Hiring concerns. Payroll issues. Strained budgets. Anxiety over lost contracts and imminent layoffs.
Looking back on the weeks since President Donald Trump first sought to halt federal grant and loan spending, Michigan nonprofits shared their ongoing concerns with the Senate Oversight Committee on Wednesday, warning that any continued issues in accessing government funding could bring cuts and closures to several essential programs.
Health care centers, Head Start programs, independent living centers for individuals with disabilities and more are still facing the consequences of a Jan. 27 memo from the United States Office of Management and Budget looking to freeze federal spending to ensure compliance with a series of executive orders issued by the president.
While multiple federal judges have blocked the attempted grant and loan pause, nonprofit leaders testified that their confidence in our federal system had been permanently shaken, and that some damage cannot be undone.
At the beginning of the hearing, Committee Chair Sam Singh (D-East Lansing) noted that Michigan is what’s known as a donor state, meaning it sends more taxes to Washington D.C. than it sometimes receives back.
“That is something that we know happens on a basis, not every year, but many years. And for us, I want to make sure that we see those dollars, as much of those dollars, coming back to our state and effectively being used here in the state,” Singh said.
Debbie Brinson, the CEO of Honor Community Health Center in Pontiac, said in her more than 30 years of working in health and human services, she had never experienced a situation like she did in January where the Department of Health and Human Services payment system stopped without any kind of warning.
Because of stringent requirements, most federally qualified health centers use this payment system to make payroll, as funds must be expended either three days before or three days after the request.
“So for that first week, first time ever have I tapped into my reserves, which I am grateful for having and being able to make that payroll. So I tapped into reserves twice in that down period without having any clear understanding of what was happening,” Brinson said.
Although the system is back up, Brinson said her concerns remain. After six weeks, their health center still has not received payment approval for a carryover of less than $600,000, something that would normally be approved within four weeks.
“It’s still six weeks out and we’ve not heard any indication from the Help Desk, because there’s no help desk for us to check in with,” Brinson said.
Additionally, the payment system has changed, Brinson said, requiring multiple levels of approval for a payment request for the payroll payments they had missed.
The confusion around the funding freeze has also fueled staffing concerns unlike any Brinson had seen in her career, with frontline staffers coming to her to ask if they have a job. Additionally while the health center is already stretched on frontline staffing, the pause on grant funding has not helped its hiring efforts, Brinson said.
These hiring issues aren’t unique to health care centers either, according to MaDonna Princer, the executive director of Head Start for Kent County, which provides early childhood education and support for families at or below the federal poverty level.
Since federal funding concerns emerged at the end of January, Princer said she’d had multiple people decline positions with their program. While they hadn’t had anyone tell them explicitly, Princer said she understood it could have been tied to the uncertainty of their program’s funding.
Chanda Hillman, the CEO of Flowers Early Learning, another Head Start program serving Berrien, Cass and Van Buren counties, said she was at a conference for the National Head Start Association when the funding freeze first hit.
“When we collectively realized that we were locked out of the payment management system, my phone buzzed with panicked calls from my CFO. Ninety-four percent of our funding comes from those federal dollars. By 11 a.m. I was on an emergency call with my HR director, CFO, attorney and board chair. By 2 p.m. we had no choice without access to our funding and without knowledge of when we would get funding, we were unable to keep staff working,” Hillman said.
“For the first time in our 53 year history, we faced the unimaginable. We had to prepare to close our doors for the next day because our reliable funding was no longer available,” Hillman said.
While the program was able to regain access to its funds and reopen, the terror of that moment has not left them, Hillman said. Nor is the crisis over.
“Our Fiscal Year ‘25 funds had not yet arrived and were later than usual. Our organization is a Feb. 1 Head Start grantee, which means our funding cycle starts anew on that date each year. Federal regulations prevent us from spending prior year funds in the new grant year, leaving us in a precarious position as we waited for our next round of funding to arrive,” Hillman said.
When the month began, they only had assurances that their funding would be deposited and by Wednesday Feb.6, Hillman said they had to make a hard call. If the funds were not deposited Friday, they would need to shut down.
The following morning presented another issue: the payment management services system was once again down, as well as HeadStart.gov and Administration for Children and Families website.
“On Friday, Feb. 7, the funds were deposited into our account, just in the nick of time. This is not how early childhood education should operate,” Hillman said.
Deanne Kelleher, the director of nutrition services for the Michigan Department of Education also noted the pause’s impact on their local food purchasing agreement and grants for local foods for schools and childcare, which support small local farmers, and farmers from historically underserved groups.
“Our partners will purchase food from their local farmers to use in their programs, and they submit invoices to our office. In turn, the Office of Nutrition Services makes a reimbursement request to the federal government to draw down funds to reimburse these partners,” Kelleher explained.
“On Feb. 21 of this year, our office submitted a reimbursement claim for our [local food purchasing agreement] funds and received a notification of denial for any invoices dated after Jan. 19 of this year. We have been in contact with the Michigan Attorney General’s Office regarding this freeze and our federal funds,” Kelleher said.
“After numerous attempts, I did receive a phone call from the USDA on Wednesday — last Wednesday — Feb. 26 that acknowledged that invoices prior to Jan. 19 would be paid, but nothing after Jan. 20,” Kelleher said.
Federal funding also makes up 10 to 20% of the budget for Michigan’s centers for independent living supporting people with disabilities, said Teri Langley, the executive director of the Disability Network Michigan.
About one in four adults in Michigan have a disability, Langley said, later telling committee members that federal funding cuts could lead to less services at the centers, alongside staff layoffs and the closure of satellite offices, meaning individuals with disabilities may need to travel further to access services, and staff may be unable to travel to rural areas where these offices are housed.
Following Langley’s testimony, state Sen. Dayna Polehanki (D-Livonia) spoke out against the demonization of diversity, equity and inclusion efforts.
“Everything you do is an example of inclusion, right? Including scooping up these people, including them into society, so that they can live independently like they want to. So I’d just like to point out for anyone who’s demonizing DEI, this is the ‘I’ and this is what you’re demonizing,” Polehanki said.
Kelley Kuhn, the executive director of the Michigan Nonprofit Association underscored the testimony offered by other nonprofit leaders, underscoring their importance to Michigan communities.
“Michiganders rely on nonprofits to support their health, safety and well being, especially when challenges arise. You have heard from several of those today. During a time when more than 40% of households in Michigan struggle with the costs of the basics, the charitable sector’s role in driving job creation and economic growth is indispensable and unmatched by addressing well-documented and data-proven gaps that keep people from fully participating in work, school and every facet of life,” Kuhn said.
“Nonprofits, as has been stated, operate on very tight budgets. Most do not have large amounts of operating capital, and we estimate that most cannot survive a freeze or a pause for more than three to six months,” Kuhn said.
When news broke about the freezes, Head Start programs, meal programs for seniors, services that support immigrants, homeless shelters, veterans programs — specifically those helping with housing, accessing veteran benefits, such as health care — domestic violence shelters, farmland and farming projects and projects to protect our natural resources, were just a few of the various organizations who reached out to the Michigan Nonprofit Association, Kuhn said.
“The administration’s attempts to withhold disbursement of dollars already committed by the federal government have already led to the disruptions and lives of working families in Michigan. We strongly oppose such broad and arbitrary action that, without due process, contradicts acts of Congress and upends the lives of everyday Michiganders throughout the state,” Kuhn said.
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