The United States Department of Education is under renewed legal pressure after a group of states accused it of failing to fully comply with a court directive to reinstate cancelled school mental health grants. In a court filing led by California on March 17, states argued that the department restored only six months of funding instead of the full year mandated by the court.
The dispute stems from a lawsuit filed by 16 states after several school districts were informed in April 2025 that their grants would be terminated. The Donald Trump administration had justified the move by stating that the programmes did not align with its policy stance on diversity, equity, and inclusion. However, the United States Court of Appeals for the Ninth Circuit upheld a lower court ruling directing the department to reconsider its decision and restore funding.
Despite this, states contend that the department’s partial reinstatement threatens the continuity of essential mental health services in schools. Some districts have reportedly issued layoff notices in advance and reduced internship opportunities in high-need areas due to funding uncertainty.
The controversy is linked to broader changes in federal education funding policies introduced after grants were originally approved during Joe Biden’s tenure. In April 2025, nearly $1 billion in multi-year funding under key mental health programmes was cancelled. Revised guidelines introduced later restricted the use of funds for activities related to political advocacy, gender identity issues, and racial themes as defined by the department.
Although over $208 million in new grants were awarded in December under updated criteria, previously approved grants were not reinstated through the new process. States argue that additional conditions—such as mandatory performance reports due by June 1—create further uncertainty, effectively allowing the department to reassess funding mid-year.
Officials warn that inconsistent funding cycles are disrupting planning, staffing, and service delivery in schools. The case remains ongoing, with states seeking full restoration of funds and clearer assurances for future support of student mental health programmes.
