A federal judge on Friday temporarily blocked the Trump administration from freezing billions of dollars in federal funding for child care and social service programs in five Democratic-led states, ruling that the policy change had caused “immediate operational chaos” and that the states had met the threshold for emergency relief.
The decision by U.S. District Judge Arun Subramanian, a Biden appointee, halts the administration’s funding freeze for at least 14 days while the case proceeds. The ruling applies to California, Colorado, Illinois, Minnesota, and New York, which collectively receive more than $10 billion annually from the affected federal programs.
The five states sued earlier this week after the Department of Health and Human Services (HHS) abruptly suspended payments under three major anti-poverty programs: the Child Care and Development Fund, the Temporary Assistance for Needy Families (TANF) program, and the Social Services Block Grant. The move followed HHS’s announcement Tuesday that it had “reason to believe” the states were distributing federal funds to illegal immigrants — a claim it did not substantiate.
In court filings, the states accused the administration of using the fraud-prevention initiative as a political weapon against blue states that have resisted federal immigration enforcement. They also said the freeze was disrupting vital services for millions of low-income families.
“The government has not articulated a legal or factual basis for withholding this money,” said Jessica Ranucci, an attorney representing the New York Attorney General’s Office during a telephonic hearing Friday.
She told the court that child care providers in multiple states were already facing delayed reimbursements. “If the states can’t access these funds, there will be immediate uncertainty for providers and families who rely on these programs,” she said.
Judge Subramanian’s order does not rule on the constitutionality of the policy but preserves the status quo while the states’ lawsuit proceeds. “The plaintiffs have met the standard for temporary relief to prevent irreparable harm,” the judge said, according to a court transcript.
A lawyer for the federal government, Kamika Shaw, told the court that her understanding was that “the money had not stopped flowing” to the states, despite the freeze order earlier in the week.
The Trump administration has defended the freeze as part of a broader anti-fraud initiative spearheaded by Vice President J.D. Vance and HHS Secretary Robert F. Kennedy Jr., who have both pointed to billions in stolen taxpayer funds uncovered in Minnesota and other states.
HHS said this week that the freeze was intended to verify eligibility and ensure that federal benefits were not going to “ineligible recipients, including undocumented individuals.”
Critics, however, say the administration is unfairly targeting states that have clashed with Trump over immigration policy and welfare oversight.
New York Attorney General Letitia James, who is leading the lawsuit, hailed the ruling as “a critical victory for families whose lives have been upended by this administration’s cruelty.”
The freeze affected more than 1.3 million children who rely on federal subsidies for child care through the Child Care and Development Fund, as well as millions of families receiving cash and employment assistance under TANF.
While Friday’s ruling restores funding to the five plaintiff states, the administration’s anti-fraud measures remain in effect nationwide. Forty-five other states are now required to submit attendance verification and “strong justification for the use of funds” in order to continue receiving federal payments, according to HHS guidance.
Separately, around the same time as Judge Subramanian’s ruling, Agriculture Secretary Brooke Rollins announced a $130 million funding freeze for Minnesota, citing ongoing concerns about mismanagement tied to the Feeding Our Future scandal — a pandemic-era fraud scheme in which more than 70 defendants have been charged and 57 convicted for stealing $250 million meant to feed low-income children.
In a letter to Minnesota Gov. Tim Walz, Rollins said the state’s access to funding would remain suspended until it provided full documentation “justifying expenditures of federal dollars.”