A coalition of states led by New York Attorney General Letitia James has filed a new federal lawsuit alleging the Trump administration is attempting to terminate school mental health grants worth approximately $1 billion by exploiting a procedural distinction, in deliberate circumvention of a permanent injunction issued by the Western District of Washington.
The 56-page complaint, filed on Friday, names Secretary of Education Linda McMahon as a defendant alongside the Department of Education (DOE). Fourteen attorneys general joined James in the action, a smaller coalition than the 16 states that brought the original litigation.
The new lawsuit follows a December 2025 ruling by U.S. District Judge Kymberly K. Evanson, a Biden appointee sitting in the Western District of Washington, who granted summary judgment to the states on their Administrative Procedure Act claims. According to Courthouse News Service, Judge Evanson found the DOE had acted arbitrarily by citing only ‘a list of political principles’ in its discontinuation notices, without identifying which principle each individual grant had violated, and required the department to reconsider each grant using proper regulatory procedures based on actual performance data.
The Ninth Circuit subsequently refused to stay that permanent injunction. A panel found the department ‘has not made a strong showing it is likely to succeed on the merits’ of its position that the original discontinuation notices were lawful, according to Courthouse News Service’s report on that ruling.
What the School Mental Health Grants Cover
The funds in dispute support two programmes created by a bipartisan majority in Congress in response to both the Parkland, Florida school shooting and the Uvalde, Texas shooting. The first is the Mental Health Service Professional Demonstration Grant Programme (MHSP). The second is the School-Based Mental Health Services Grant Programme (SBMH), which provides funding to help schools hire, train, and retain school-based mental health staff.
Both were designed as five-year initiatives to place 14,000 new mental health professionals in schools, with a particular focus on low-income and rural communities. Washington Attorney General Nick Brown led the original multistate action; his office’s account of Judge Evanson’s earlier ruling notes that she required both sides to agree on a timeline for the department to make lawful grant continuation decisions, as reported by the Washington Attorney General’s office.
In February, the DOE issued what it termed a ‘Directive on Grant Priorities,’ announcing it would review all existing grants against the current administration’s policy preferences and indicating to Congress that it planned to reallocate approximately $1 billion from the discontinued grants to new purposes. After losing in court, the department committed roughly six months’ worth of continued funding for both programmes, but has since reversed course.
The Circumvention Argument at the Heart of the New Claim
The DOE’s current position turns on a procedural distinction: that Judge Evanson’s injunction barred ‘discontinuances,’ and that it now proposes to ‘terminate’ the protected grants under separate directives, a mechanism not expressly addressed by her order. The department has asked Judge Evanson for clarification, arguing it retains ‘a separate authority to terminate.’
The states reject that framing. ‘Though the precise mechanism by which the Department plans to end the protected grants may have changed, its illegality has not,’ the complaint states. The DOE has indicated cuts could begin as soon as 31 July.
The position is further complicated by a post-injunction move by the department. After an October ruling requiring reinstatement of the original grants, the DOE simultaneously released revised grant priorities that narrowed programme eligibility to increasing access to school psychologists only, departing from the original broader category of school mental health professionals, with $270 million available under the revised competition, according to the AASA.
The states are filing the new suit protectively, acknowledging that the existing injunction may or may not cover terminations effected through these newer directives, and declining to wait for a ruling on the DOE’s pending clarification motion before seeking further judicial intervention. The Department of Education’s MHSP grant programme page lists current recipients drawn from state education departments and large urban school districts across the country.
‘The first time this administration tried to take mental health services away from children, we beat them in court,’ James said. ‘Now they are trying to carry out the same illegal scheme and abandon students who need support. We already stopped them once, and we are prepared to do it again.’
Subject to any ruling on the DOE’s pending clarification motion, the more immediate legal flashpoint is whether Judge Evanson accepts that ‘termination’ under a new directive is materially different from the ‘discontinuance’ her December 2025 order prohibited. Her answer to that question will determine whether the states need the new lawsuit at all.
