Five Democratic-led U.S. states have filed a lawsuit against President Donald Trump’s administration after the federal government froze over $10 billion in childcare and family assistance funds, citing concerns over fraud in state welfare programs. The lawsuit was filed in federal court in Manhattan by California, Colorado, Illinois, Minnesota, and New York following an announcement by the U.S. Department of Health and Human Services (HHS) that it had restricted the states’ access to these funds pending further review.
The frozen funds include $7.3 billion from the Temporary Assistance for Needy Families (TANF) program, which provides cash aid to low-income families with children, and nearly $2.4 billion from the Child Care and Development Fund (CCDF), which helps make childcare affordable for families with working parents. HHS also blocked access to $869 million in social services grant funding. All of these programs are administered by the Administration for Children and Families within HHS.
HHS justified the freeze by claiming concerns over “widespread fraud and misuse of taxpayer dollars” in the affected states’ welfare systems, including the possibility that individuals who were not U.S. citizens or lawful permanent residents were illegally receiving benefits. The freeze expands on a prior action last week that blocked $185 million in annual childcare funds to Minnesota following allegations of extensive fraud in its social services programs. Minnesota Governor Tim Walz subsequently announced he would not seek a third term, citing a need to focus on addressing the fraud scandal.
Democratic leaders in the affected states strongly condemned the funding freeze. New York Governor Kathy Hochul described it as “vindictive,” while Illinois Governor JB Pritzker called it “wrong and cruel.” New York Attorney General Letitia James emphasized that the administration should not “play political games with the resources families need to help make ends meet.”
The lawsuit contends that HHS lacked a legitimate basis for the freeze, failed to provide supporting evidence for its fraud allegations, and violated Congress’s constitutional authority over federal spending. The case highlights ongoing political and legal battles over federal oversight, welfare funding, and the balance of power between the executive branch and Congress.
