HHS Rescinds $10 Billion Funding Freeze for Five States

The United States Department of Health and Human Services rescinded a $10 billion freeze on child care subsidies and social services funding for California, Illinois, Colorado, New York, and Minnesota. The funding targeted $7.4 billion from the Temporary Assistance for Needy Families program, $2.4 billion from the Child Care and Development Fund, and $870 million from the Social Services Block Grant.

The Trump administration originally imposed the restrictions in January 2026, citing fraud claims and investigations in Minnesota. However, a federal judge in New York temporarily blocked the move after the five states filed a lawsuit alleging the freeze was unconstitutional and politically motivated. In a letter sent to the states last week, the agency confirmed it would no longer restrict funding drawdowns or require justifications regarding benefits provided to ineligible immigrants.

Government lawyers now argue that the lawsuit is moot because the restrictions and associated data requests were voided. However, attorneys for the states oppose dismissing the case. New York State attorney Rabia Muqaddam suggested the rescission is a tactic to shield the White House Office of Management and Budget from judicial review and the discovery of internal communications.