Agreed. They must have known about this problem earlier.
The peace & violence program, which I applied to as well, appears to be just a subdepartment of social psych. department - I was rechecking this after seeing the news from Anita. One prof I contacted there also mentioned budget constraints (mind you, this was a week before the deadline), but not how serious the issue was for the department of social psychology. She said she wouldn't be taking any students, but nothing about the complete lack of funds for anybody.