Five states sue over Trump freezing $10 billion in childcare, family assistance funds

Five Democratic-led states sued U.S. President Donald Trump’s administration on Thursday, challenging its decision to freeze their access to more than $10 billion in federal childcare and family assistance funds based on what it said were concerns about fraud in their welfare systems.

California, Colorado, Illinois, Minnesota and New York filed a lawsuit in federal court in Manhattan after the U.S. Department of Health and Human Services on Tuesday said it had restricted their access to the funds pending further review.

The White House did not immediately respond to a request for comment.

The funds include $7.3 billion from the Temporary Assistance for Needy Families program, which provides cash assistance to low-income families with children, and nearly $2.4 billion from the Child Care and Development Fund, which helps make childcare more affordable for such families with working parents.

HHS also said it had frozen the five states’ access to $869 million in social services grant funding. All three programs are overseen by the Administration for Children and Families, an agency within the department.

In announcing the freeze, the agency cited concerns about “widespread fraud and misuse of taxpayer dollars” in those states’ welfare programs, as well as the possibility that individuals other than U.S. citizens and lawful permanent residents were illegally receiving benefits.

The agency’s action appeared to build on its decision a week earlier to freeze $185 million in annual childcare funds to Minnesota following allegations of widespread fraud in the state’s social services programs.

On Monday, Minnesota Governor Tim Walz, a Democrat who served as then-Vice President Kamala Harris’ running mate in the 2024 presidential election, announced he will not seek a third term in office so he can instead focus on the fraud scandal.

The affected states’ Democratic leaders have blasted this week’s funding freeze, which New York Governor Kathy Hochul called “vindictive” and Illinois Governor JB Pritzker called “wrong and cruel.”

New York Attorney General Letitia James, a Democrat, in announcing Thursday’s lawsuit said she “will not allow this administration to play political games with the resources families need to help make ends meet.”

The lawsuit alleges the agency lacked a legitimate justification for the funding freeze, failed to provide evidence to support its fraud concerns and infringed on Congress’s power over spending as enshrined in the U.S. Constitution.