When the new Trump administration directed a temporary freeze on federal grants and loans last month, Nebraska Gov. Jim Pillen’s office offered a calm public-facing reaction. 

But emails and text messages show that many Nebraska state agencies — like organizations across the U.S. — were simmering with questions and concern.

The federal directive had thrown into question if and when governments and organizations would get billions they use for everything from housing programs to highway construction. 

Nebraska spent $5.5 billion in federal funding in the last fiscal year. Tendrils of that money weave through state government, helping pay for Medicaid and unemployment benefits, for state employee salaries and for communities recovering from natural disasters.

With funding in limbo, some agency leaders received streams of messages from national groups and confused peers in other states. They fielded emails from Nebraskans worried their projects were in jeopardy. 

And Pillen’s office weighed the value of the largest federal grant ever awarded to Nebraska’s Department of Environment and Energy: $307 million from the Environmental Protection Agency, much of it to incentivize farmers to adopt more environmentally friendly practices. 

“Internally, I don't know how much we want to fight to keep it,” policy adviser Cicely Wardyn wrote of the grant. “We can use it to benefit farmers and agriculture in the state, but don't want to run counter to Trump's Administration.”

Judges temporarily blocked the freeze, the White House rescinded the original memo, and the disruptions proved short-lived, state officials said. But several executive orders still aim to weed out programs that don’t align with President Donald Trump’s priorities.

“We are on board with the government cutting costs, and we are on board and working with the federal delegation to identify things that can be trimmed and cut,” said Lee Will, who heads Nebraska’s Department of Administrative Services, in an interview with the Flatwater Free Press.

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Federal grants to states totaled over $1 trillion in fiscal year 2022, according to a Pew analysis. Nebraska received over $6 billion that year — nearly 40% of the revenue it collected. 

But on Jan. 27, the Office of Management and Budget issued a memo directing federal agencies to pause funding while they evaluate programs “consistent with the President’s policies and requirements.” 

“The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve,” it read.

The pause would take effect at 5 p.m. the next day.

The memo led to mass confusion, reported multiple national outlets.  

A group of 22 states and Washington, D.C. sued and highlighted the “devastating harm” that would come from cuts to programs like Medicaid, state health systems, disaster relief, infrastructure, law enforcement and criminal justice, education and foster care.

The portal for processing Medicaid disbursement was “inoperable” in multiple states “for hours,”  that complaint said. According to a Federal Funds Information for States analysis, 56% of Nebraska’s federal grants went to Medicaid in fiscal year 2023.

U.S. Rep. Don Bacon, a Republican from Omaha who has criticized some of President Trump’s early moves, said some of the administration’s cost-cutting efforts have proven inefficient.

“President Trump is fulfilling his promise to the American people by looking for waste and fraud, which should be cut,” he said in a statement. “Before we make these cuts though, let’s analyze unintended consequences. We’ve seen too many cuts having to be overturned because the homework was not done.”

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The morning after the federal directive, the director of Nebraska's Department of Transportation sent text messages to contacts in the governor's office and department leaders.

“Expecting guidance from USDOT by end of day, no action at this time but this would break us,” Vicki Kramer wrote in a message regarding a federal program that reimburses states for highway construction and maintenance.

Confusion and concern weren’t limited to the transportation department.

The Flatwater Free Press requested emails and text messages from Jan. 27 and 28 that included words like “Executive Order,” “Trump” and “OMB” to and from top officials at 13 state agencies and the governor’s office, and those groups sent FFP hundreds of messages in response. 

On Jan. 28, emails circulated from professional organizations and other national groups as they grappled with its effects.

“No one seems to fully understand the impact, and this is true across all government agencies,” one email read.

The Republican Governors Public Policy Committee asked for specific program concerns to raise during a call with OMB. The $307 million EPA grant “is absolutely caught in this,” Pillen’s staff concluded.

State Budget Administrator Neil Sullivan flagged money for disaster recovery and broadband access, and noted that the state’s biggest federal aid programs — aside from Medicaid — are education aid and developmental disability aid.

The Department of Veterans’ Affairs leadership noted federal funding makes up “a significant amount” of the operating budget for its veterans homes.

Employees within the state’s Department of Health and Human Services thought it could impact the Women, Infants, and Children (WIC) supplemental nutrition assistance program that, as of  September, served about 35,000 Nebraskans a month.

“If this suspends draws, we will rapidly run into problems,” DHHS Deputy Director of Finance and Operations Ryan Daly wrote in an email. “Subaward reimbursements could pause for a short period and payroll could be covered temporarily, but I’m concerned direct assistance programs like WIC could fail to make benefit payments.”

In the hours before the funding freeze was to go into effect, the Department of Economic Development sent a few requests to the federal government seeking to get money for affordable housing construction projects.

There was also evidence of support for some cost-cutting. 

Rick Dahlman, deputy director of the state’s Military Department, responded to a forwarded email from a national group that included a list of Department of Homeland Security grants headed for review: “You have to admit there is a lot of fat in there!”

“Agree,” responded Erv Portis, assistant director for the state’s Emergency Management Agency. “Problem is we have enough funds drawn down for about two payrolls.”

As the day went on, agencies circulated new information from OMB, including a list of programs under review and instructions for evaluation. 

“This is wild …” wrote Dave Dearmont, chief economist in the Department of Economic Development, in an email with that attachment.

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Concerns about the funding freeze trickled down to local governments and groups that receive federal money through the state.

A Kearney-based nonprofit that provides housing for people in crisis asked state officials whether it should pause projects related to two grants. Buffalo County emergency management wondered if it should stop purchases related to a grant that was already approved.

The Nebraska Emergency Management Agency ran into delays processing a payment for 2019 FEMA flood recovery in Plattsmouth.

“The issue we are running into is the payment system is down and our finance team cannot get into it. As far as a contact regarding the (executive order), we do not have one,” a NEMA employee wrote to Plattsmouth officials. 

The $14.3 million reimbursement pending that day has since been received, according to the city administrator.

The Nebraska Crime Commission sent an email to grant subrecipients, saying that it wouldn’t be able to access federal funds and couldn’t make new subawards.

“We had limited information from our federal contacts on how to address some of the obvious concerns,” Director Bryan Tuma said in an email to the Flatwater Free Press. “Honestly, they had limited information available to them as well. Within 24 hours the directive was rescinded and we resumed normal operations.”

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By that afternoon, state agencies received a message from Dave Lopez, Pillen’s chief of staff.

“We understand that clarity is needed … Please know that we are working to get additional guidance from our federal partners and will join a call with OMB tomorrow to learn more,” he wrote.

If state agencies could themselves get clarification from a federal agency, he wrote, they should do it. And they should compile any priority issues to raise with the feds. 

“So as to reduce confusion, we urge you to wait until we have better information from the federal government before providing further public guidance to your stakeholders,” Lopez wrote.

Gov. Pillen’s spokesperson also issued a reassuring public statement: “President Trump promised the American people he would rein in federal spending that was out of step with their priorities. He is clearly making good on that promise.

“Our administration is working with state agencies and our federal partners to evaluate the impacts … and will provide additional input in the days and weeks ahead.”

A judge soon temporarily blocked the freeze, and the White House rescinded its memo.

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Will, the DAS director, said the disruptions were so brief that they didn’t affect the state’s financial system.

“For a couple hours we were not able to draw any federal funds,” he said in an interview. “Then, by the end of the afternoon, everything was open again.”

Several Nebraska agencies also told the Flatwater Free Press that none of their federal funding is currently frozen. 

Other executive orders have triggered some changes at state agencies, emails show. 

The Department of Labor took down its Discrimination Complaint Information Form, where people could report alleged discrimination. According to a spokesperson, the department still receives those complaints via other means.

The Federal Highway Administration rescinded guidance for a federal program meant to help states build out electric vehicle charging infrastructure, which has paused Nebraska’s related efforts at the state level.

After a call with other states on Jan. 28, Kara Valentine, then interim director of the Nebraska Department of Environment and Energy, wrote to colleagues that all environmental justice conferences had been canceled, a “Climate and Economic Justice Screening Tool” had “gone dark” and they expected all federal environmental justice employees to be put on administrative leave.

“I explained that we don’t know the status of any funding, whether there is a pause or freeze on federal funding, or when to expect answers from EPA; the other states are in the same boat,” Valentine wrote.

That $307 million EPA grant was initially put on hold. Despite recent news from the EPA that the funding is now accessible, the state has yet to receive confirmation that the EPA has finished its review of this specific grant program, according to NDEE spokesperson Carla Felix.

Nebraska plans to use that money to, among other efforts, offer financial incentives for ag producers to adopt more environmentally-friendly practices and for commercial buildings to be more energy efficient.

The state is once again developing programs related to the grant but delaying implementation “in order to protect Nebraska grant recipients from incurring costs that the State may not be able to reimburse,” Felix said. 

Will said it makes sense to scrutinize every grant. He expects changes, but said the state didn’t yet know specifics. 

“We are supportive, broadly, that we need to reduce our debt and we need to reduce our expenditures,” he said. “Especially on things that don’t provide benefit to the citizens of Nebraska and, more broadly, of the United States.”

The Flatwater Free Press is Nebraska’s first independent, nonprofit newsroom focused on investigations and feature stories that matter.