NEW YORK, NY — In a late-night legal victory for five Democratic-led states, a federal judge in Manhattan has issued a temporary restraining order (TRO), halting the Trump administration’s attempt to freeze more than $10 billion in federal childcare and family assistance funding.
U.S. District Judge Arun Subramanian, a Biden appointee to the Southern District of New York, ruled Friday, January 9, 2026, that the funding must remain in place for at least the next 14 days. The decision comes after California, Colorado, Illinois, Minnesota, and New York filed an emergency lawsuit late Thursday, alleging that the Department of Health and Human Services (HHS) acted illegally by withholding billions of dollars earmarked for the nation’s most vulnerable families.
A Tense Standoff Over “Operational Chaos”
The conflict ignited on Tuesday when the Trump administration announced it was pausing funding for three major federal programs:
- The Child Care and Development Fund: Subsidizes childcare for low-income parents.
- Temporary Assistance for Needy Families (TANF): Provides cash assistance and job training.
- Social Services Block Grants: Funds a variety of local safety net initiatives.
HHS officials, led by Secretary Robert F. Kennedy Jr., defended the move as a necessary measure to combat “widespread fraud.” The administration specifically cited concerns that these states were funneling taxpayer dollars to individuals residing in the country illegally.
However, the states’ attorneys general argued in court that the freeze was not about oversight, but “political retribution.” New York Attorney General Letitia James, who spearheaded the litigation, characterized the policy as a “campaign of chaos” that threatened to shut down daycare centers and leave millions of children without basic support.
The “Minnesota Catalyst” and the New Anti-Fraud Task Force
The administration’s focus on fraud stems largely from a multi-year scandal in Minnesota, where federal prosecutors have uncovered hundreds of millions of dollars stolen from government nutrition and housing programs. The scandal has become a national flashpoint, contributing to Minnesota Governor Tim Walz’s decision earlier this week to drop his bid for reelection to focus on the crisis.
In a move to institutionalize this crackdown, the White House recently announced the creation of a new Assistant Attorney General role within the Department of Justice, dedicated solely to investigating fraud in federal welfare programs.
“For too long, Democrat-led states have been complicit in allowing massive amounts of fraud to occur under their watch,” said HHS spokesperson Andrew Nixon. “Under the Trump administration, we are ensuring taxpayer dollars are used for their intended, lawful purposes.”
Judge Subramanian Under Fire
Judge Subramanian’s ruling focused on maintaining the “status quo” while the legal merits of the freeze are debated. He noted that the states had demonstrated a likelihood of “irreparable harm” if the funding were cut off abruptly.
Since the ruling, the judge—who is the first South Asian judge to serve on the Southern District of New York—has faced intense criticism from some conservative circles online. Critics have labeled the ruling “judicial insurrection,” while the judge’s supporters and legal experts maintain that the TRO is a standard procedural protection used when billions in essential aid are at risk.
Frequently Asked Questions (FAQs)
1. Which states are involved in the lawsuit? California, Colorado, Illinois, Minnesota, and New York. Collectively, they represent roughly half of the total funding being targeted.
2. What exactly did the judge decide? Judge Subramanian issued a Temporary Restraining Order (TRO) that prevents the Trump administration from cutting off the funds for 14 days. He did not yet rule on whether the freeze is legal or if the fraud allegations are true.
3. Why is the Trump administration freezing these funds? HHS Secretary RFK Jr. and other officials allege that these states have failed to provide “workable plans” to stop fraud and have “reason to believe” funds are being used to support non-citizens illegally.
4. What happens next? The court will hear further arguments from both the states and the federal government within the next two weeks. At that point, the judge will decide whether to issue a preliminary injunction, which would block the freeze for a much longer period.
5. How are families affected by this freeze? If the freeze is eventually upheld, thousands of daycare providers could lose subsidies, and millions of low-income families would see a halt in cash assistance used for housing, utilities, and food.
General FAQs: The Childcare Funding Battle
1. Which states are involved in the lawsuit against the Trump administration? Five Democratic-led states have joined the legal challenge: California, Colorado, Illinois, Minnesota, and New York. These states collectively receive over $10 billion annually from the targeted federal programs.
2. What exactly did the judge decide on Friday? U.S. District Judge Arun Subramanian issued a Temporary Restraining Order (TRO). This order prevents the federal government from freezing the funds for at least 14 days. It is meant to maintain the “status quo” while the court hears more detailed arguments.
3. Why did the Trump administration freeze the funds in the first place? The Department of Health and Human Services (HHS) cited “serious concerns about widespread fraud.” Specifically, HHS officials stated they have “reason to believe” that funds were being improperly provided to individuals who are not American citizens or lawful permanent residents.
4. What programs are being affected by the freeze? The freeze targets three major federal grant programs:
- Child Care and Development Fund (CCDF): Subsidizes daycare for 1.3 million low-income children.
- Temporary Assistance for Needy Families (TANF): Provides cash assistance and job training.
- Social Services Block Grant (SSBG): Supports foster care and services to prevent child neglect/abuse.
5. Is there evidence of the fraud the administration is claiming? While there have been documented cases of fraud in Minnesota (specifically involving some daycare centers), the states argue that HHS has provided no specific evidence of widespread fraud in the other four states (CA, CO, IL, NY) to justify a total funding freeze.
6. What is the “Minnesota fraud scandal” mentioned in reports? Scrutiny intensified after a viral video and subsequent investigations alleged that nearly $100 million was bilked from childcare and nutrition programs in Minneapolis. This scandal has been a primary talking point for the administration’s nationwide crackdown.
7. What happens after the 14-day TRO expires? Before the 14 days are up, the court will hold a hearing for a Preliminary Injunction. If granted, this would block the funding freeze for a much longer period (potentially until a full trial is completed). If denied, the administration could resume the freeze.
8. How many families could be affected if the freeze is allowed? If the $10 billion remains frozen, millions of families could lose access to affordable childcare, and hundreds of thousands of individuals could lose the cash assistance they use for housing, food, and utilities.