A federal judge issued a temporary restraining order on Jan. 9 to prevent the Trump administration from withholding $10 billion in federal funds for child care and family assistance programs in five states.
Attorneys general in California, Colorado, Illinois, Minnesota, and New York filed a lawsuit on Jan. 8 after the Department of Health and Human Services (HHS) announced it was withholding the funds pending further review of state-administered programs due to concerns “about widespread fraud and misuse of taxpayer dollars.”
The freeze applies to $2.4 billion in Child Care and Development Fund, $7.35 billion in Temporary Assistance for Needy Families fund, and $869 million under the Social Services Block Grant, the agency stated on Jan. 6.
HHS said its Administration for Children and Families has identified concerns indicating the benefits “may have been improperly provided to individuals who are not eligible under federal law.”
In a Jan. 9 order, U.S. District Judge Arun Subramanian granted a temporary restraining order to the states, saying the relief is preliminary and meant “to protect the status quo” while the court reviews the plaintiffs’ injunction request. The order will expire in 14 days.
In their lawsuit, the states alleged that HHS exceeded its authority by withholding congressionally approved funds, arguing that the agency failed to provide a “legitimate justification” for the funding freeze or evidence to support its fraud claims.
The states further argued that the freeze was intended to pressure them into turning over documents related to the use of funding for the affected programs within two weeks, including “personally identifying information of millions of their residents.” They said that it was “an impossible timeline.”
The lawsuit seeks injunctive relief to prevent the government from withholding the funds and a court declaration that the freeze is unconstitutional.
“As New Yorkers struggle with the rising cost of living, I will not allow this administration to play political games with the resources families need to help make ends meet,” New York Attorney General Letitia James, who is leading the coalition in pursuing legal action against HHS, said in a statement.
HHS General Counsel Mike Stuart has said it is necessary for the agency to freeze the funds because of “serious concerns” in the states that warranted immediate review and action.
“These same officials were complicit in this perpetuation of this fraud and allowing it to happen. Waste, fraud, and abuse will not be tolerated in the Trump administration,” Stuart stated on X.
Prior to the funding freeze on the plaintiffs’ programs, HHS halted federal funding for child care programs in Minnesota amid an ongoing probe into allegations that the state had funneled funds to fraudulent daycares.
Deputy Health Secretary Jim O’Neill stated on Dec. 31 that he had asked Minnesota Gov. Tim Walz to provide a comprehensive audit of child care centers in Minnesota, covering records of attendance, licenses, complaints, investigations, and inspections.
Walz has defended his administration’s handling of fraud in state programs. The governor announced on Jan. 5 that he would not run for a third term in a bid to focus on resolving the issues.
