Judge rules Federal Government can't withhold social service funds from 5 Democratic states amid fraud claims

on February 06, 2026

U.S. District Judge Vernon Broderick ruled Friday that President Donald Trump's administration must keep funds flowing to child care subsidies and other social service programs in five Democratic-controlled states — at least for now.  The judge granted the states' request for a preliminary injunction and a stay against the administration to bar it from withholding the money while a lawsuit works its way through the courts.

The states affected include California, Colorado, Illinois, Minnesota and New York who receive a total of more than $10 billion a year from the programs.

Attorneys representing the federal government in the case did not immediately return emails seeking comment. A spokesperson for the U.S. attorney's office for the Southern District of New York declined to comment.

Two temporary rulings had been issued in January, when the states sued, that blocked the federal government from holding back the funding, with the latest set to expire on Friday.

The programs effected are the Child Care and Development Fund, which subsidizes child care for 1.3 million children from low-income families nationally; the Temporary Assistance for Needy Families program, which provides cash assistance and job training; and the Social Services Block Grant, a smaller fund that provides money for a variety of programs.

“Every day, hundreds of thousands of New Yorkers rely on these funds to pay for necessities and provide their children a safe place to learn," New York Attorney General Letitia James said in a statement. "This illegal funding freeze would have caused severe chaos in the lives of some of the most vulnerable families in our state. I am proud to have secured another victory in this case to put a stop to it.”

California Attorney General Rob Bonta added in a statement, "The Trump Administration’s actions are not only unlawful — they are cruel, targeting the most vulnerable among us.”

The government’s explanation of its actions has shifted.

When the U.S. Department of Health and Human Services announced it was withholding the money, it said there was “reason to believe” the states were granting benefits to people in the country illegally. It did not initially explain where the information came from. But in a court hearing, a federal government lawyer said it was largely in reaction to news reports about possible fraud.

HHS did not immediately return an email request for comment.

While the government’s initial news release said it “froze” access to money, federal lawyers told the judge that wasn’t what was happening. Rather, they said, the Trump administration was requiring more information from those states.

The Trump administration has targeted multiple programs in Minnesota due to previous fraud cases and new allegations, mostly involving members of the state’s Somali community.

Supplementary  the heightened requirements for the four other Democratic-led states, the administration also has required all states to submit more information about how they’re using money in the child care program before they can draw down the funds.

Advocates warn that cutting off the child care subsidies could have deep impacts. Day cares that accept the subsidies could face the risk of layoffs or closures. And that would affect both the lower-income families who receive the subsidies and families who don’t. And for many families, losing child care can make it hard or impossible to work.