States sue Trump administration over clawback of school funds

Bloomberg News

California and New York are among 16 states and the District of Columbia suing the Trump administration for blocking access to federal funds earmarked to help alleviate pandemic-era learning losses at schools.

The lawsuit filed Thursday challenges the U.S. Department of Education's "abrupt and unlawful rescission" of extensions that preserved access to hundreds of millions of dollars in American Rescue Plan Act funding being used by school districts, according to California Attorney General Rob Bonta.

"The Trump administration's blatant disregard for the education of our children is on full display with this latest round of funding cuts," Bonta said in a statement. "With each step President Trump takes to dismantle the Education Department, he is throwing our schools into turmoil and jeopardizing the academic success of a generation of American children."

The lawsuit filed against the U.S. Department of Education in the Southern District of New York is the 13th lawsuit California Attorney General Rob Bonta has lodged against the Trump administration.

The lawsuit stems from a March 28 letter Education Secretary Linda McMahon sent to state school superintendents saying the government would not honor the extension of COVID-19 relief grants. 

"Extending deadlines for COVID-related grants, which are in fact taxpayer funds, years after the COVID pandemic ended is not consistent with the Department's priorities and thus not a worthwhile exercise of its discretion," McMahon wrote in the letter.

States were offered an opportunity to extend spending if they reapplied and the DOE would grant extensions on a case-by-case basis.

Moody's Ratings analysts said in an April 8 report the rapid policy shifts are creating credit risks for traditional K-12 and charter schools.

Trump signed an executive order asking that the Department of Education be dissolved, which would take an act of Congress. Nearly half of the department's 4,100-member staff has been laid off since he took office, contracts have been canceled and K-12 schools and universities have been threatened with the loss of funding if they don't certify they are ending practices supporting diversity, equity and inclusion programs.

The AG's argued in the lawsuit that the federal agency's decision to abruptly cut off access to the funds violates the Administrative Procedure Act, because it reversed its prior decision to allow access to the funding through March 2026, and instead immediately terminated the states' access without a sufficient explanation and contrary to Congress' intent. The lawsuit seeks a preliminary and permanent court order preventing the change.

"The funds had a rollout period of another year, but Secretary McMahon cut them overnight, and she doesn't have the authority to do that," Bonta said.

California school districts would lose access to over $200 million in previously awarded and obligated funding, according to Bonta's office. The funding is being used for afterschool and summer learning programs, for educational technology and for mental health services.

New York Attorney General Letitia James said her state lost access to $134 million in funds, part of which was helping to support programs to help students recover from missed classroom time.

The District of Columbia and the following states are plaintiffs: Arizona, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Nevada, Oregon and Pennsylvania.