California, Rhode Island, and Wisconsin Sue Department of Education Over Special Education Grant Cancellations
In a major judicial blow to the Trump administration's efforts to dismantle traditional federal education programs, a multi-state coalition has won a decisive federal lawsuit challenging the abrupt cancellation of special education grants. A federal district judge ruled late last week (mid-July 2026) that the Department of Education acted illegally when it unilaterally terminated millions of dollars in federal grant money1 intended to support special education programs.2
The lawsuit—originally filed by California Attorney General Rob Bonta, Rhode Island Attorney General Peter Neronha, and Wisconsin Attorney General Josh Kaul—challenged the Department of Education's sudden cancellation of the State Personnel Development Grants (SPDG). These multiyear grants, authorized under the Individuals with Disabilities Education Act (IDEA), are designed to assist state educational agencies in reforming and improving their systems for personnel preparation and professional development to improve services for children with disabilities.
The Court's Ruling: A Major Defeat for the Administration
The federal court ruled that the Department of Education's abrupt termination of the special education grants was unlawful3 and violated the Administrative Procedure Act (APA). The court rejected the department's argument that it possessed the unilateral authority to cancel or claw back congressional appropriations4 based on the current administration's policy goals.
The court's decision represents a major victory for the state coalition, ensuring that millions of dollars in special education funding will continue to flow to state educational agencies as they prepare for the upcoming school year. Henry Redman, reporting on the decision, noted:
"A federal judge ruled late last week that the Trump administration had acted illegally last summer when it cut millions in federal grant money... Wisconsin, coalition of states, win lawsuit against Trump administration cutting federal grants."
The victory is part of a broader string of judicial defeats for the Trump administration's efforts to retroactively cut or divert federal grants. It mirrors a July 17, 2026, ruling by U.S. District Judge Indira Talwani, who struck down an OMB grant-apportionment loophole that the administration had used to retroactively claw back approved federal grants.
Political Context and California's Legislative Response
The Trump administration's efforts to transition federal special education programs from the Department of Education to the Department of Health and Human Services (HHS)—under the leadership of RFK Jr.—and the Department of Justice (DOJ) have faced intense bipartisan pushback in Congress and the courts.
As part of a national reshuffling of civil service responsibilities, the administration has moved to shutter regional offices, including the California branch of the Office of Civil Rights. In response to these federal disruptions and to ensure fiscal stability, California Governor Gavin Newsom signed a budget trailer bill in late July 2026 providing a record $2.4 billion in state funding for special education—a 43% increase from the previous year.
This state-level cash surge is designed to act as a critical lifeline for cash-strapped school districts, such as the Sacramento City Unified School District, which have faced severe financial strain due to the federal funding disputes.
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An instance of Unilateral executive policy shifts trigger immediate litigation and legislative blockades. — The administration's unilateral try to terminate special education grants was quickly blocked by a successful multi-state lawsuit. ↩︎
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An instance of Bipartisan legislative coalitions and federal courts block the executive use of administrative funding freezes to bypass Congress. — It demonstrates a federal court blocking a unilateral executive attempt to freeze or cancel congressionally mandated program grants. ↩︎
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An instance of Unilateral executive efforts to withhold, redirect, or bypass legislatively mandated program funding face swift judicial blocks. — Federal judges invalidated the administration's unilateral clawback of educational funding as an unconstitutional overreach of spending authority. ↩︎
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An instance of Unilateral executive budget withholdings trigger immediate separation-of-powers standoffs. — A federal judge ruled that the executive branch acted illegally when it unilaterally terminated millions of dollars in special education grants. ↩︎