President Donald Trump speaks before Robert F. Kennedy Jr., is sworn in as HHS Secretary in the Oval Office, Thursday, Feb. 13, 2025, in Washington (Photo/Alex Brandon).
A federal judge in New York on Tuesday blocked the Trump administration from clawing back over $1 billion in pandemic-era relief funds which had previously been earmarked for schools nationwide.
In a terse, two-page preliminary injunction, U.S. District Judge Edgardo Ramos, a Barack Obama appointee, barred the U.S. Department of Education (DOE) and Secretary Linda McMahon from cutting off access to the funds at issue “during the pendency of this litigation or until further order of the Court.”
On March 28, McMahon issued a two-page letter to state education officials, informing them of plans to cut off some $1.1 billion in federal funding grants intended to help low-income students and address long-term effects of the COVID-19 pandemic on education.
“The Department has concluded that the further extension of the liquidation period for the aforementioned grants, already well past the period of performance, was not justified,” the letter reads. “You and your subrecipients have had ample time to liquidate obligations.”
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Litigation quickly followed.
In early April, led by New York Attorney General Letitia James, 17 states sued the Trump administration, alleging violations of the Administrative Procedure Act (APA), the long-standing federal law that governs the actions of administrative agencies.
In their 55-page complaint, the plaintiffs argued the funding in question “provides essential support for a wide range of critical education programs and services needed to address, among other things, the impact of lost instructional time; students’ academic, social, and emotional needs; the safety of school environments; and the disproportionate impact of the coronavirus on economically disadvantaged students.”
In the letter, McMahon essentially announced a same-day cessation of access to American Rescue Plan Act (ARPA) funding — with one small caveat. The DOE left open the possibility of extensions to each state’s so-called “liquidation period” on an “individual project-specific basis.”
The plaintiffs, for their part, alleged the DOE “abruptly and arbitrarily reversed course” without warning — after previously giving states until March 2026 to access the disputed funds.
Motions practice ensued.
The state plaintiffs filed a separate motion for a preliminary injunction and the government defendants filed an in opposition.
In its memorandum of law, the government said the states had, in essence, simply sued too early because “no final decision has been made concerning whether and to what extent any State’s liquidation period will be extended for any given project.”
Attorneys for the U.S. Department of Justice argued the plaintiffs “may still request access to the liquidation funds” and, because of this theoretical access, cannot show irreparable harm — the standard required for court to grant a preliminary injunction.
“The Department is charged with administering these funds and, five years after the start of the pandemic, it has an interest in ensuring that the funds requested by the States are being utilized for their intended purposes,” the government’s opposition argued.
The DOJ also argued the states had not met the “high standard” required to show the rescission letter qualified as “arbitrary and capricious,” a term of art native to the APA.
“Here, the Department concluded that, in light of the end of the public health emergency, it was appropriate to rescind the prior extension to allow it to evaluate ‘how a particular project’s extension is necessary to mitigate the effects of COVID on American students’ education,”” the government’s filing went on.
In early April, plaintiffs responded with a memorandum of their own.
In their reply, the states rubbished the notion that the DOE’s actions in the rescission letter were not final by noting how “liquidation periods have already expired — one year earlier than permitted by the extensions.”
The plaintiffs also took the government to task for the quick about-face in access to funding.
From the states’ reply, at length:
The sole basis Defendants offer for rescinding the prior extension approvals is that granting additional time for Plaintiffs to access [education stabilization] funding “years after the COVID pandemic ended is not consistent with the Department’s priorities and thus not a worthwhile exercise of its discretion.” But [the DOE] previously approved Plaintiffs’ extension requests long after the federal government had declared in May 2023 that the COVID-19 pandemic was over. Defendants offer no justification for what had changed to make the end of the pandemic a “reasoned explanation” for rescinding the previously approved extension when the pandemic had already been over for more than a year at the time [the DOE] approved Plaintiffs’ extension requests. Up until two weeks ago, [the DOE] consistently took the position that Plaintiffs’ liquidation periods extended through March 2026.
The states went on to note the issues they would face should access to ARPA’s education stabilization funds be cut off by the Trump administration.
“Absent relief from this Court, Plaintiffs — including their education departments, local school districts, and the communities they serve — have suffered, and will continue to suffer, immediate and irreparable harm through the irredeemable loss of programs and services necessary to address the pandemic’s long-term effects, and the need to lay off staff that run those programs and services whose salaries are paid through the [education stabilization] funding grants,” the motion argued.
While the court’s order does not address the merits, the court sided with the states’ positions — at least in terms of preliminary relief.
Ramos also directed McMahon to make sure all of her subordinates were on the same page.
“The Defendants must provide written notice of this Order to all personnel within [the DOE],” the court order reads. “The written notice shall instruct all personnel that they must comply with the provisions of this Order. Defendants must file a status report within three (3) days of this Order evidencing that all personnel within [the DOE] have received this notice.”
