North Carolina Attorney General Jeff Jackson has announced that AmeriCorps and the federal Office of Management and Budget will release hundreds of millions in previously frozen federal funds. The move reverses a Trump administration directive that had halted the group’s volunteer work earlier this year amid concerns of waste and mismanagement at the agency following multiple failed audits.
AmeriCorps, the federal service agency tasked with coordinating national volunteer efforts, is allocated more than $1.2 billion taxpayer dollars annually in the federal budget, but has been under increasing scrutiny following eight consecutive failed financial audits.
Earlier this year, Jackson signed North Carolina onto an existing lawsuit by dozens of other state officials, all of whom are Democrats, and celebrated the release of taxpayer money in a press statement last week. Jackson’s announcement did not reference the failed audits and management concerns surrounding AmeriCorps.
Audit Failures Elicit Watchdog Warning
A November 2024 independent audit revealed that AmeriCorps’ financial statements could not be verified—resulting in a “disclaimer of opinion.” Auditors identified 11 material weaknesses and two significant deficiencies in internal controls, financial reporting, and IT systems. These include recurring deficiencies dating back to 2017.
In December of 2022, then in 2024, AmeriCorps was the focus of investigative hearings on Capitol Hill by the US House Subcommittee on Education and Workforce Development.
“Unfortunately, AmeriCorps has a long history of abusing taxpayer dollars,” said Subcommittee Chairman Rep. Burgess Owens, R-UT in the 2024 hearing. “AmeriCorps is
entrusted with over $1 billion of taxpayer funds every year, with the result of failure of
eight consecutive audits. In 2023, the AmeriCorps Inspector General issued a ‘Management Challenges’ report detailing significant challenges AmeriCorps faces. This includes being unable to detect fraud.
“We have no real idea when AmeriCorps will be able to have a clean audit again. In fact, this year’s audit includes 78 recommendations still open, even after AmeriCorps said it addressed 20 last year,” he added.
Freeze of taxpayer funds for further investigation
The audit findings and lawmakers’ investigations raised red flags of mismanagement and led the Trump administration in April of 2025 to direct AmeriCorps to halt recovery work by more than 50 full-time volunteers in western North Carolina, part of a broader program freeze of over $400 million and 750 service personnel nationwide.
In response to the freeze, Jackson, a Democrat, joined 22 other Democratic attorneys general along with the Democratic governors of Kentucky and Pennsylvania in suing the Trump administration. They argued that the freeze unlawfully withheld funds that had already been appropriated by Congress.
A federal judge subsequently issued a preliminary injunction on June 5, ordering the restoration of grant funding and reinstatement of AmeriCorps members, though staff terminations were not restored.
In the President’s Budget for 2026, the administration proposed closing AmeriCorps. A White House spokesperson, Anna Kelly, defended the administration’s actions.
“AmeriCorps has failed eight consecutive audits and identified over $45 million in improper payments in 2024 alone. President Trump has the right to restore accountability to the entire Executive Branch,” she told Politico in June.
Dem AG’s sue over AmeriCorps
Jackson says that the path is now clear for immediate distribution.
“The federal government knew that it would lose against us in court because it had no right to cut funds for AmeriCorps that Congress had already authorized,” he said. “This money belongs to North Carolina and is crucial for western North Carolina’s recovery.”
According to Jackson, restored funds will now resume operations for several western North Carolina recovery initiatives:
- Project MARS (Big Brothers Big Sisters of WNC): 45 staff aiding 18 counties with meals, supplies, shelters, and school support.
- Project Conserve: 25 staff serving 25 counties through debris removal, tree planting, and storm-system repairs.
- Project POWER: 14 staff helping over 10,500 residents in Buncombe, Henderson, and Madison counties with food distribution, wellness checks, and cleanup efforts.
- Additional programs include literacy services, community gardening, mental health support, teacher assistance, and grocery distribution.
Oversight vs. Urgency at the Forefront
Last week’s release of the withheld funds allows AmeriCorps recovery programs in western North Carolina and elsewhere to continue operating, even as AmeriCorps remains under federal audit scrutiny. The case highlights an ongoing tension between addressing waste and financial management problems at the federal level, while some state officials look to ensure that federal taxpayer-funded programs proceed without interruption.