A federal judge has ordered the Trump administration to continue releasing billions of dollars in federal support for child care and social services to five Democratic-led states, temporarily halting an effort to restrict the funds while the dispute moves through the courts.
U.S. District Judge Vernon Broderick ruled on Friday to extend an earlier temporary restraining order by two weeks, preventing the federal government from withholding money from California, Colorado, Illinois, Minnesota and New York. That initial order, issued earlier this month, was set to expire on Friday.
Broderick said he would later decide whether the funding should remain in place for the duration of the legal challenge to the administration’s actions.
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The dispute stems from notices sent in early January by the U.S. Department of Health and Human Services to the five states. The agency said it would require new justifications for how funds aimed at supporting low-income families were being spent and demanded additional documentation, including the names and Social Security numbers of some program beneficiaries.
At the center of the case are three major programs: the Child Care and Development Fund, which helps cover child care costs for about 1.3 million children from low-income families nationwide; the Temporary Assistance for Needy Families program, which provides cash assistance and job training; and the Social Services Block Grant, which supports a wide range of social programs.
The states say the combined funding from these programs exceeds $10 billion annually and is critical to vulnerable populations. In New York City alone, officials say the money covers roughly half the cost of shelters for homeless families.
For TANF and the Social Services Block Grant, the federal request required states to submit detailed data, including recipients’ personal information dating back to 2022, by a Jan. 20 deadline.
Government attorneys told the court on Friday that the department had been working on clearer guidance about what information was required before the initial restraining order took effect, AP reported.
Earlier this month, HHS said it was pausing the funding because it had “reason to believe” the states were providing benefits to people in the country illegally, though it did not offer specifics at the time.
During Friday’s hearing, Mallika Balachandran, a lawyer for the federal government, said the concerns were based on media reports, but she could not identify which ones. Federal officials have previously pointed to a video by a right-wing influencer alleging fraud at Minneapolis day care centers run by people with Somali backgrounds.
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Broderick questioned whether the administration had singled out the five states before determining whether credible fraud allegations existed. Balachandran said she did not know.
The judge also challenged the logic of tightening access to funds before uncovering evidence of wrongdoing.
“It just seems like the cart before the horse,” he said.
The states, all led by Democratic governors, argue that the move was politically motivated and designed to target President Trump’s opponents.
They note that around the same period, the administration imposed additional hurdles on Minnesota for other federal funding and began asking all states to account for their use of child care program funds.
In court filings last week, the states said what they described as a funding freeze violated federal law. They argued that Congress established specific procedures for identifying fraud or noncompliance and that the administration bypassed those steps.
The filings also contend that freezing funds broadly over unproven concerns is unlawful and that complying with the data request amounted to an “impossible demand on an impossible timeline.”
Jessica Ranucci, a lawyer in New York’s attorney general’s office representing the five states, told the judge she learned only about 30 minutes before the hearing that the federal government was developing additional guidance for states. She said that information had not appeared in earlier court filings.
In a filing this week, the administration objected to the states’ characterization of its actions as a “funding freeze,” even though the headline on the HHS announcement read: “HHS Freezes Child Care and Family Assistance Grants in Five States for Fraud Concerns.”
Federal lawyers argued that the states could access future funding if they submitted the requested information and were found to be in compliance with anti-fraud requirements. The administration also said it had continued to provide some funding during the dispute.
Lawyers for the states countered that most of the money was effectively inaccessible until the restraining order was issued.
The case comes amid broader threats by the administration to use federal funding as leverage. Trump said earlier this month that “sanctuary cities” and their states could lose federal money if they resist his immigration policies.
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This week, the White House budget office instructed federal agencies to collect information on funding received by several states, while stressing that the request was not intended to withhold funds.
