While Wisconsin receives less federal funding than most other states, that support is critical for some populations in the state.
In Wisconsin, federal support is critical for many seniors, students, veterans, people who have disabilities, and individuals from low-income families in Wisconsin, according to a new Wisconsin Policy Forum report called “Federal Funding Cuts Loom.” Lost funding “could slice deep,” including in urban areas like Milwaukee and Racine, where many people depend on federal aid, the report finds.
“As one of the poorest large cities in the United States, Milwaukee and many of its residents directly or indirectly benefit from federal aid through Medicaid, FoodShare and education programs,” the report states.
The Wisconsin Policy Forum report, released on Thursday, provides a snapshot of the role federal funding plays in the lives of Wisconsin residents at a time when the Trump Administration and Republican members of Congress are looking to cut areas of federal spending.
The report cites data from the Rockefeller Institute of Government, stating that Wisconsin received about $86.46 billion in federal grants and payments in 2022. Federal programs such as Social Security, Medicare and Medicaid each serve more than one million people in Wisconsin.
With nearly 1.4 million people in Wisconsin enrolled in Medicaid, Wisconsin will receive nearly $7.6 billion in federal Medicaid funding in fiscal year 2025. Cutting the state’s Medicaid funding 1%, for example, would result in a loss of about $76 million.
“For that reason, changes to Medicaid are arguably the most significant cuts being considered at present by Republicans in Congress and the new administration,” the report states.
Potential administrative cuts to these programs and recent staffing cuts at the Social Security Administration “could affect over time the ability of some eligible recipients to enroll and take other necessary steps to access these benefits,” the report states.
The Trump Administration also made staffing cuts at the Department of Veterans Affairs, which is the largest federal employer in Wisconsin and operates Zablocki Veterans Administration Medical Center in Milwaukee. This department is a significant area to watch as federal funding cuts loom, according to Wisconsin Policy Forum.
“The veterans hospitals and clinics are the biggest federal employers in the state and they serve a critical role in providing care to their patients,” the report states. “Health care institutions in the state have already faced staffing and labor challenges in some areas in recent years. The ability of veterans hospitals and clinics to serve their patients could be affected by federal layoffs or other measures that compound difficulties in attracting or retaining workers.”
The Supplemental Nutrition Assistance Program also faces potential funding challenges. A proposal from House Republicans to cut the share of SNAP benefits that the federal government pays, “which potentially could lead to either higher costs for states or reduced benefits,” the report states. Wisconsin could lose about $314 million each year, according to the Wisconsin Department of Health Services, which opposes the federal cuts to SNAP.
Housing
As residents across Milwaukee and the state struggle to afford housing, federal support for affordable housing initiatives could be at risk.
President Donald Trump’s budget proposal for fiscal year 2026 would cut base spending authority on discretionary programs outside of defense by 22.6%.
“City of Milwaukee officials have estimated that these cuts could result in a $20 million hit to the city’s budget in two areas: Community Development Block Grants, which support economic development and affordable housing efforts, and HOME grants, which support housing for low-income residents,” the report states.
Education and research funding
In 2021, Wisconsin received nearly $1.1 billion in grants from the U.S. Department of Education, including $213.8 million in Title I grants for students from low-income families and $297.2 million in special education grants.
That same year, Milwaukee Public Schools had the sixth-highest poverty rate among the 120 largest urban districts in the country and received the fifth-highest amount in per pupil federal funding among those districts in the 2019-20 school year, according to Wisconsin Policy Forum.
“Though these funds do not fully cover the added costs of educating students with disabilities and other obstacles such as poverty, these revenues are critical to MPS, and any reductions to them would be keenly felt,” the report states.
In fiscal year 2023, Wisconsin received $1.16 billion for research and development, with most of that funding going to higher education institutions.
In February, the Trump Administration attempted to cap the National Institutes of Health indirect reimbursement rate at 15% for current and new NIH awards. Institutions can get reimbursed for indirect costs such as those incurred to cover administrative support, facility maintenance, utilities and more. Institutions generally have negotiated indirect cost reimbursement rates significantly higher than 15%.
While the February guidance from the NIH has since been blocked by a federal judge, the decision could be overturned, the Wisconsin Policy Forum report states. The National Science Foundation released a similar guidance in May that caps indirect funding rates for NSF grants.
Wisconsin Attorney General Josh Kaul joined a multi-state lawsuit to block the NSF guidance, which “would cost UW-Madison nearly $38 million by 2028 and cost UW-Milwaukee $1.5 million a year,” the report states.
