State Dept. terminates USCCB migration funds

USCCB refugee resettlement 'no longer effectuates agency priorities,' the State Department said

The State Department canceled a contract with the U.S. Conference of Catholic Bishops on Thursday, likely bringing to a halt a nationwide effort organized by the USCCB to provide resettlement services for refugees to the United States.

U.S. bishops' conference. Pillar Media file photo.

The cancellation leaves uncertain the status of a USCCB lawsuit aiming to recoup millions in back payments for resettlement services, with the federal government telling a judge that the USCCB should seek payment through “available administrative channels” outside the lawsuit.

In a Feb. 26 letter, U.S. State Department comptroller Joseph Kouba told the USCCB that its financial agreement for refugee resettlement “is immediately terminated as of Feb. 27, 2025,” because the grant “no longer effectuates agency priorities.”

“Effective immediately upon receipt of this Notice of Termination, the Recipient must stop all work on the program and not incur any new costs after the effective date cited above. Payment requests for legitimate costs incurred prior to this notification are allowable.”

The government’s decision came after the USCCB filed Feb. 18 a lawsuit which challenged a federal decision to suspend federal funding for refugee assistance programs administered by various Catholic Charities outlets across the country, with the USCCB distributing funds and serving as coordinator of the programs.

According to the lawsuit, the U.S. bishops had been awarded federal funds since 1980 to provide “vetted and approved” refugees with “transitional support” of housing and employment search assistance during their first 90 days in the U.S.

The bishops argued that refugees have a legally established right to federally-funded resettlement assistance, “which is essential to helping them establish a new home.”

Resettlement help “promotes the successful settlement of refugees in their communities, including by promoting gainful employment or connections to educational opportunities, thereby diminishing the likelihood that newly arriving refugees will be dependent on ongoing public support,” the conference argued.

The Trump Administration decision to freeze resettlement programs, the bishops said, was illegal, and should be overturned by a judge.

The bishops also argued that the federal government owed more than $20 million for services completed in recent months, and should be compelled to pay according to the terms of its contracts.

While the lawsuit was just getting underway, a federal judge last week denied a USCCB request that funding should be reinstated, including for back pay, while the lawsuit made its way through the court.

Judge Trevor McFadden ruled Feb. 20 that the conference had not shown that reinstating the funds during the lawsuit’s course was necessary to avoid "irreparable harm” to the bishops’ conference.

The USCCB has not responded to questions from The Pillar regarding the Feb. 27 of its agreements with the federal government.

It is not clear whether the federal government will formally move for McFadden to dismiss the USCCB’s lawsuit. But in its Feb. 27 filing, the government challenged the viability of the suit.

“The termination of the agreements leaves open only a question of unpaid money under the cooperative agreements, and, to the extent Plaintiff disputes any reimbursement, the dispute needs to be brought in the Court of Federal Claims.”

“Even could the Court have entertained injunctive relief under the Administrative Procedure Act to compel the State Department to take some action under the agreements during their lifetimes, any such jurisdiction is now clearly absent as there is no action the Court could compel—the parties’ agreements are no longer in force,” the government argued.

“Relatedly, Plaintiff can claim no irreparable harm absent an injunction as the only relief now available to Plaintiff is money damages should the parties be unable to resolve any payment disputes through any available administrative channels.”

The termination is likely to significantly curtail Catholic-led refugee resettlement programs across the country, which serve thousands of refugees annually, and lead to layoffs at the bishops’ conference and at Catholic Charities agencies.

In 2023, the USCCB received a total of $130 million in contracts for programs dealing with refugees and migrants, most of which was distributed to agencies, including Catholic Charities agencies, providing on-the-ground services.

From 2014 to 2023, the conference received $797 million in government funding and spent a total of $850 million on the programs.

On Feb. 7, the bishops’ conference laid off 50 people, roughly one-third of staff members in its migration and refugee services office, in response to the federal reimbursement freeze. The cancellation of future federal funds could see most of the remaining USCCB staffers working on resettlement programs laid off.

Outside Washington, Catholic Charities agencies have already begun laying off employees working in refugee resettlement — in one case, terminating 20% of its work force in response to the federal funding freeze.