California, four other states sue Trump administration over frozen welfare funds

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California Attorney General Rob Bonta is joining forces with four other attorneys general from Colorado, Illinois, Minnesota and New York in suing President Donald Trump and the U.S. Department of Health and Human Services for withholding from the states roughly $10 billion in funds for child care, social services and welfare.

The frozen funds — $5 billion of which were allocated to California — come amid allegations of “extensive and systemic fraud” in the California Child Care and Development Fund, which subsidizes child care costs for low-income families, and two other social service programs.

The lawsuit, filed Thursday in the U.S. District Court for the Southern District of New York, is the 53rd the state has filed since Trump’s inauguration in January 2025. Both Bonta and Gov. Gavin Newsom have denied the federal government’s allegations, which were presented in three letters to Newsom earlier this week.

“The letters also failed to provide any reason why only our five states are the targets of this baseless investigation and accusation,” Bonta said at a press conference Thursday evening.

Currently, $2.2 billion of the state’s $7.3 billion in child care spending comes from federal funding. The freeze, which would include about $1.4 billion for child care, will begin immediately, according to Bonta’s office. The lawsuit filed on Thursday asks the court to block the freeze.

California leaders have maintained that the federal funding cuts are illegal and targeted toward Democratic-led states.

“These are cuts that are going to throw parents into total disarray, forcing them to choose between going to work or taking care of their children,” Newsom said during his State of the State speech on Thursday.

Advocates of child care providers argue that, despite the federal government’s assertion in the letters that this freeze is temporary, the impact could be far-reaching for families and child care providers.

Child care providers currently take home an average of $7 per hour, according to Child Care Providers United, a union representing over 70,000 providers in California.

“This is a system that is already balancing on a knife’s edge,” said Alexa Frankenberg, the union’s executive director. “And this threatened freeze would completely destabilize child care for hundreds of families, children and providers across the state of California.”

The letters, sent by the U.S. Department of Health and Human Services, also called out the state for providing undocumented immigrants with “benefits intended for American citizens and lawful permanent residents,” and come amid ongoing investigations involving claims that up to roughly $9 billion, half of the funds allocated to state programs, may have been fraudulently obtained since 2018.

On top of calling for more fiscal accountability, the HHS said it would review California’s spending of the funds and request “verified attendance documentation” and other data from child care providers — a move Bonta called “concerning and also deeply questionable.”

Stacy Lee, the chief learning officer and senior managing director of early childhood at the research nonprofit Children Now, noted that child care providers are already required to compile detailed information regarding daily operations, and the federal government’s requests are an “additional burden of bureaucracy and procedures.”

Beyond the fiscal impacts of frozen funds, some child care providers of Somali descent in San Diego are on edge after receiving harassing phone calls, texts and messages online this week, according to Frankenberg. They have become a target after a fraud scheme in Minnesota was found to have included people of Somali descent.

“This time has been very challenging for not only me, but all Somali care providers in our community,” said Samsam Khalif, a Somali child care provider for 20 years, on Thursday morning during a press conference organized by United Domestic Workers. “As our safety and peace of mind has been stripped away.”

Doug Moore, executive director of United Domestic Workers of America, said during the press conference that “in the last week, our members have had strangers show up at their door for the purpose of intimidation and harassment.”

Families who receive subsidized child care are not the only ones whose services could be disrupted, Lee said.

“Your child care provider may lose resources that enable them to stay operating, so it’s really important for everyone who cares about child care, even paying themselves out of pocket, that this could impact their access to care if it goes on too long or is extended,” she said.