Five Democratic-led states have filed a lawsuit against U.S. President Donald Trump’s administration after it froze their access to more than $10 billion in federal childcare and family assistance funds. California, Colorado, Illinois, Minnesota, and New York filed the case in federal court in Manhattan, challenging the administration’s move that cited concerns about fraud in state welfare systems.
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The frozen funds include $7.3 billion from the Temporary Assistance for Needy Families (TANF) program, which provides cash support to low-income families, and nearly $2.4 billion from the Child Care and Development Fund, which helps make childcare more affordable. In addition, the Department of Health and Human Services (HHS) froze $869 million in social services grant funding. All three programs are managed by the Administration for Children and Families.
Gov. Hachul complains that President Trump is demanding information on the daycare recipients in New York in order to make sure fraud isn’t occurring.
Instead of providing that info, she’s suing.
What criminality is Hochul hiding?pic.twitter.com/GHnJ4jGoyg
— Paul A. Szypula 🇺🇸 (@Bubblebathgirl) January 8, 2026
HHS stated that its action was prompted by allegations of widespread fraud and misuse of taxpayer dollars in the affected states, including concerns that benefits were being received by individuals who are not U.S. citizens or lawful permanent residents. The freeze follows a similar move last week, when Minnesota lost $185 million in childcare funding amid claims of extensive fraud in its social services programs.
Democratic leaders of the impacted states have condemned the freeze, calling it politically motivated and harmful to families. New York Governor Kathy Hochul described it as “vindictive,” while Illinois Governor JB Pritzker said it was “wrong and cruel.” New York Attorney General Letitia James emphasized that the administration cannot “play political games with the resources families need to help make ends meet.”
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The lawsuit contends that HHS lacked proper justification for the freeze, failed to provide supporting evidence for its fraud allegations, and infringed upon Congress’s constitutional power over federal spending. The case now seeks to restore access to the funds and prevent further disruption to critical childcare and family support programs.