January 29 Update: The White has rescinded OMB Memorandum M-25-13 that halted federal grants and loans.

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The White House recently issued a directive to temporarily halt certain federal grants and loans, initiating a review of agency programs to ensure they align with the administration's priorities. This decision, while strategic, has introduced uncertainty, especially for programs reliant on federal funding. Critics, including Senate Minority Leader Charles E. Schumer (D-NY), have questioned the legality of this pause. Schumer stated, “Congress approved these investments and they are not optional; they are the law,” urging the administration to reverse the directive immediately.

Implications for Summer Camps

While essential programs like Medicare and Social Security are unaffected, the status of other federally funded initiatives, including those supporting small businesses and community programs, remains unclear. For camps receiving direct or indirect federal funding, this pause could disrupt financial planning and operations.

To navigate this uncertainty, here are four key steps to consider:

1. Review Current Funding Sources: Assess your camp’s budget to identify programs or operations supported by federal funds. Determine if the pause could result in immediate or future shortfalls.
2. Seek Clarification: Contact the federal or state agencies or departments that provide your funding. Request specific guidance on whether your grants or loans are affected and the timeline for potential changes.
3. Explore Bridge and Alternative Funding: This may prove to be a timing question above all else, so exploring bridge funding such as a line of credit may be prudent. Look into state, local, or private funding opportunities as diversifying funding sources can provide a buffer against future uncertainties.
4. Stay Informed: Regularly monitor updates from the Office of Management and Budget (OMB) and relevant federal agencies. Official communications will provide clarity on the duration of the pause and shifts in funding priorities. 
   • OMB Question and Answers
   • OMB Instructions for Federal Financial Assistance Program Analysis

By taking these steps, camp professionals can mitigate potential disruptions and continue delivering valuable programs for the children and families they serve.

Key Questions About Federal Payments

The memo accompanying the directive has also raised questions about the terminology used in federal payments. Below are clarifications on commonly misunderstood terms:

1. What is the difference between the obligation of federal funds and the disbursement of federal funds?

• Obligation of Funds: A legal commitment by the federal government to pay funds, either immediately or in the future. This represents a liability that has been formally incurred.

• Disbursement of Funds: The actual payment or withdrawal of cash from the US Treasury to fulfill the government’s obligations.

2. What is a federal obligation of funds, and how does it occur?

An obligation occurs when the government legally commits to spending funds. For example, when an agency approves a grant, the funds are obligated, representing a commitment to pay the specified amount.

3. What is a federal disbursement of funds?

Disbursement refers to the physical transfer of funds, such as issuing checks or making electronic payments, to cover expenses or fulfill obligations.

4. What is a deferral of federal funding?

Under the Congressional Budget and Impoundment Control Act, a deferral is a temporary delay in spending allocated funds. Deferrals are used to address contingencies, ensure efficient allocation of resources, or comply with specific legal requirements. While deferrals don’t require congressional approval, they can be overturned by Congress.

Deferrals are administrative in nature and are not intended to signal broader policy changes. The Government Accountability Office (GAO) has the authority to challenge improper deferrals in court to ensure funds are released as intended.

ACA will continue to monitor this developing situation. In the meantime, understanding these key terms and staying proactive will allow camps to better manage the challenges posed by the federal funding pause.