States Address Shifting Financial Landscape for Digital Equity

The director of Washington state’s broadband office, Aaron Wheeler, thought his state had secured a $15.8 million grant from the federal government for digital equity work.

The money was part of the Digital Equity Capacity Grant Program within the Digital Equity Act (DEA), which was established through the U.S. Congress’ 2021 passage of the Bipartisan Infrastructure Law. Washington state had applied for the grant money with a plan for a train-the-trainer-style program in cybersecurity, aimed at both teaching residents digital skills and boosting cyber defenses.

Then President Donald Trump wrote a post on Truth Social.

After Trump took to social media in early May to call the Digital Equity Act “unconstitutional,” within the week, Wheeler had received an email from the feds saying the grant was canceled. The funding, and the planned programming it would support, were effectively terminated.

“Basically, that money just vanished overnight,” Wheeler said.

Washington state is not alone. States across the U.S. are grappling with the impact of President Trump terminating $2.75 billion of congressionally allocated digital equity funding, a move that puts many long-held plans for digital inclusion and broadband work into question.

But the Digital Equity Act is not the only federal funding source in play for broadband and digital inclusion.

The Bipartisan Infrastructure Law also established the Broadband Equity, Access and Deployment (BEAD) program, for which the federal government announced new rules in June after a monthslong review.

Now, the digital equity landscape looks very different than it did six months ago, due to funding changes as well as a mandate against programs and activities related to equity and inclusion, and so states must find other ways to push toward universal Internet access and other related goals.

THE ABRUPT END TO THE DIGITAL EQUITY ACT

The timing of the Digital Equity Act’s fast cancelation created near-instant problems for many states, which had planned exactly where the funds would go, often for executive initiatives.

For example, Washington’s legislative session ended in April, at which point its budget was finalized; then the cancelation came in May. The state Legislature is not expected to be back in session until 2026.

Currently, Wheeler said, there is no state funding that could replace the canceled grant, as Washington state is experiencing a budget shortfall. Still, leaders are exploring every possible avenue: “We’re turning over all the couch cushions that we can.”

In Vermont, the Digital Equity Act’s end will impact the state “significantly,” said Christine Hallquist, executive director of the Vermont Community Broadband Board. The administration has misclassified the Digital Equity Act as “a DEI program,” she said, but 95 percent of Vermonters will be impacted by its shuttering because it is a rural state, and digital equity programs often focus on rural areas.

And as more federal programs are digitized in the name of efficiency, Hallquist said people will be “left out in the dark.” The program’s cancellation threatens workforce development, cyber-crime response, and other digital inclusion activities in Vermont.

Of the $10.6 million that was committed to the state, only about $160,000 was spent before the DEA was terminated. The state has submitted its expenses so far to the National Telecommunications and Information Administration (NTIA), which is contractually obligated to pay for the pre-cancellation expenditures.

Ultimately, the Vermont Community Broadband Board has the final say on what comes next for state strategy and spending, Hallquist said. The goal is to present an alternative plan to the board in July for approval.

Maine, meanwhile, was awarded $35 million through Digital Equity Act program grants, the same that were terminated by Trump in May, and this is impacting the state’s plans to improve digital skills and Internet safety, according to an email from Maine Connectivity Authority Communications Manager Jenna Ingram. The program’s end “will disproportionately impact older, rural residents, small businesses, veterans, low-income households, and students,” she wrote.

“The loss of these funds will have a ripple effect across Maine, impacting the economy as well as access to education, work, and healthcare,” Ingram added, noting that Maine is exploring how to proceed with the critical programming that was already underway and planned as part of the state’s digital inclusion strategy.

Pennsylvania, too, has lost more than $25 million for digital equity work, and experts there have said the terminated grants stopped three years of planning overnight.

Not all state officials, however, share the same sentiments about the Digital Equity Act’s end. Texas Broadband Development Office Director Greg Conte said in an email that the state has not been significantly impacted by the termination of these funds because the state has a Broadband Infrastructure Fund that was created by state legislators in 2023. The Texas Legislature has appropriated $1.5 billion to this fund, of which the state will use a portion to design programs to get Texans access to affordable broadband, devices and skills — the pillars of digital equity work.

There are also questions around the lawfulness of ending the program in this way. The action has been deemed illegal by government officials including Hallquist and U.S. Sen. Patty Murray, D-Wash., who authored the Digital Equity Act. They and others argue that only Congress — not the president — can end a federal statute.

“There’s hope that the [Digital Equity Act] isn’t actually dead,” said Aspen Digital’s Senior Director Zaki Barzinji, citing anticipation among entities planning to leverage its funding that it could still be reinstated.

A June 6 letter from members of Congress calls on the U.S. Department of Commerce to do just that. Hallquist said Vermont officials are working with other states to get a stay on its cancellation. However, if the program’s reinstatement does not happen, Barzinji said he expects government to look to the philanthropic and private sectors to fill the gap.

WHAT ABOUT BEAD?

While Digital Equity Act initiatives have been suspended, states have been cautiously advancing their initiatives under the BEAD program while expectantly waiting for the changes that were ultimately announced on June 6.

The rule changes favor tech neutrality rather than prioritizing fiber, which has been deemed by experts the “gold standard” for its long-term benefits. Initial reactions to the policy notice are mixed.

Angela Siefer, executive director of the National Digital Inclusion Alliance, said via email that the group is disappointed by the restructuring of BEAD, writing that it “dismisses the work states have completed to date, devalues broadband affordability and community engagement, and rescinds states’ plans for ensuring households adopt the broadband services built with BEAD funds.”

She said that without the Digital Equity Act and the Affordable Connectivity Program to also contribute to the work, the changes to BEAD will impact pieces of everyday life, including students’ ability to do homework, older adults’ access to telehealth, security against cyber criminals, and the country’s general competitiveness.

Former BEAD Program Director Evan Feinman shared his initial reaction in a LinkedIn post, where he predicted changes will create a “colossal mess,” with impacts including the rescission of previously approved final proposals and the requirement of a new subgrantee selection process at taxpayers’ expense.

Following the release of new BEAD program rules, Hallquist noted that Vermont officials are still studying the federal guidance, and that while it will require changes to the state’s plan, officials’ outlook is cautiously optimistic. The state still plans to use a mix of technologies, with fiber expected to support the majority of the state’s connections.

“It’s a tight timeline given the requirement to reopen the application process, but our team plans to continue working diligently to meet the new deadlines, bring home our $229 million allocation, and finish the broadband build-out in Vermont,” Hallquist stated.

In a related note, a budget reconciliation passed by the U.S. House of Representatives also contains a controversial 10-year moratorium on AI regulation at the state level. That moratorium is receiving bipartisan opposition as the budget faces changes in the U.S. Senate. The Senate’s revised text for the budget bill, however, threatens to rescind funding that was allocated to states under the BEAD program as a consequence if they regulate AI. Experts have argued that including a provision to ban AI regulation in a budget bill is illegal.

STATES PUSH FORWARD

States are continuing to make progress on digital equity work in various ways in spite of this changing federal funding landscape.

Washington officials will continue working to get constituents online through the Broadband Equity Assistive Technology program, which leverages U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds to distribute assistive technology and skills training to people with disabilities.

The state also has a Digital Equity Forum, which Wheeler said convenes voices from populations including the LGBTQIA+ community to connect with communities and the state Legislature in an effort to understand and meet constituents’ needs. It enables cross-department collaboration with the Washington State Broadband Office, which Wheeler said “will be that place to bring all these voices together to start to come up with new plans, come up with new possibilities for funding … and starting to focus on what’s next and what’s best for communities.”

Vermont officials remain optimistic about digital equity work as well, Hallquist said, citing a “tremendous” amount of work on workforce development, accomplished through a pre-apprenticeship program. That training program launched last year and aims to help people graduate career-ready.

However, one Vermont workforce development partner, Northlands Job Corps, may be forced to close because the Trump administration’s budget request calls for its elimination. Hallquist wrote a letter to Sen. Bernie Sanders, I-Vt., in May requesting his support in calling on the U.S. Department of Labor and the White House to continue funding these programs. “These young people are our future,” she wrote.

In Maine, the work continues with investments in digital equity through the Capital Projects Fund, the NTIA Broadband Infrastructure Program, the Maine Jobs and Recovery Program, and state of Maine bond funding, Ingram said. The Maine Connectivity Authority has invested more than $150 million in state and federal funds since 2021, through initiatives like the Connectivity Hubs Program and the Regional and Wabanaki Broadband Partners program, Ingram said.

And bipartisan support endures for advancing digital equity work overall. As Feinman told Government Technology in December, digital inequities are “not a red state problem or a blue state problem,” but an American problem.