Five Democratic-Led States Sue to Restore $10 Billion in Social Safety Net Funding

Five attorneys general filed suit on Jan. 8 in federal court in New York seeking to undo a sudden freeze of billions in federal support for child care, cash assistance and community social services. The plaintiffs — California Attorney General Rob Bonta, New York Attorney General Letitia James, Colorado Attorney General Phil Weiser, Illinois Attorney General Kwame Raoul and Minnesota Attorney General Keith Ellison — asked the U.S. District Court for the Southern District of New York to order the Department of Health and Human Services to release funds they say were lawfully appropriated by Congress.

The states say HHS has frozen roughly $10 billion in funding for three programs: the Child Care and Development Fund, which subsidizes care for low-income families; the Temporary Assistance for Needy Families program, which provides cash assistance and job training; and the Social Services Block Grant, which underwrites child welfare services, foster care support, services for the deaf and state programs such as California’s CalWORKs. California officials described the total frozen amount as “over $10 billion” and said the state faces roughly half of the total hit, putting its exposure at about $5 billion.

California provided further specifics on its child care spending: the state’s total child care budget is about $7.3 billion, of which $2.2 billion comes from federal sources. The state says HHS’s action would remove roughly $1.4 billion in child care funding that families and providers currently depend on.

HHS notified the five states in letters saying it was imposing the freeze “immediately and exclusively” on those states because of “serious concerns about widespread fraud” or what HHS characterized as “extensive and systemic fraud” tied especially to California’s Child Care and Development Fund and two other programs. The states counter that the letters provide no factual or legal basis and amount to selective targeting of Democratic-led states. New York Attorney General Letitia James said the administration’s move harms “the most vulnerable families in our communities.” California Attorney General Rob Bonta said the letters “failed to provide any reason why only our five states are the targets of this baseless investigation and accusation.” California Governor Gavin Newsom warned the cuts would “throw parents into total disarray, forcing them to choose between going to work or taking care of their children.”

The complaint frames the lawsuit as a defense of basic supports that enable parents to work or pursue training and that deliver direct services to low-income adults and children. State lawyers argue the administration is overstepping federal authority by withholding funds already allocated by Congress, and they have asked the court to halt the freeze and order immediate release of the money.

Public health and community advocates said the freeze risks immediate harm: disruptions to child care could reduce parental workforce participation, worsen financial instability for families, and strain child welfare and foster care systems already stretched thin. Programs supported by the Social Services Block Grant also fund disability services and language and accessibility supports that disproportionately affect marginalized communities.

HHS officials did not immediately respond to requests for comment. The litigation adds to California’s ongoing legal challenges against federal policy; state officials noted this suit was among a long series of actions taken since the prior administration. The case is likely to test the limits of executive authority to withhold congressionally appropriated funds and could have wide-ranging consequences for social safety net policy and the communities that rely on it.