US Education Department accused of limiting mental health grants despite court order

The United States Department of Education is facing renewed legal scrutiny after states alleged that it failed to fully comply with a court order requiring the reinstatement of previously cancelled school mental health grants.

According to a court filing led by California on March 17, the department restored only six months of funding to affected recipients instead of a full year, despite judicial direction to reinstate the grants.

Sixteen states had earlier filed a lawsuit after school districts were informed in April 2025 that their grants would be revoked. The administration of President Donald Trump had said the programmes were inconsistent with its policy priorities related to diversity, equity and inclusion.

The dispute returned to court after the United States Court of Appeals for the Ninth Circuit upheld a lower court ruling directing the department to reconsider its decision to terminate the grants.

States now argue that the partial funding decision threatens the continuation of mental health services in schools. According to the March 17 filing, some districts have already issued advance layoff notices and scaled back internship programmes in high-need schools.

Funding dispute linked to policy shift

The legal conflict is part of an ongoing dispute over federal education funding approved during the administration of President Joe Biden. In April 2025, the Department of Education cancelled up to $1 billion in multi-year grants under the School-Based Mental Health Services Grant Program and the Mental Health Service Professional Demonstration Grant.

The department later introduced revised funding guidelines in September. These stated that grant funds could not be used for activities such as promoting gender ideology, political activism, racial stereotyping or what it described as hostile environments for students.

Under the revised criteria, previously awarded grants were not restored through the new application process.

In December, the department distributed more than $208 million in new grants aligned with the updated priorities. This came despite a federal court order issued the same month requiring the reinstatement of earlier grants across 16 states.

The order covered around 50 school districts, colleges and nonprofit organisations. The department appealed the ruling, but the appellate court rejected its challenge last month.

States allege incomplete compliance

Despite the appellate decision, states said the department has limited the funding period to six months, describing it as a “risk mitigation measure” linked to financial and operational uncertainty while litigation continues.

The department has also required affected grant recipients to submit performance reports by June 1. States said this condition effectively creates a mid-year review that could determine whether funding continues.

“Defendants make clear that they may decline to provide funding after June 1,” the states said in the March 17 filing, according to K-12 Dive. They added that this approach shortens the budget cycle and creates uncertainty for grant recipients.

Concerns over programme continuity

States and grant recipients have argued that federal regulations allow cancellation of such grants only after performance evaluations, which had not yet taken place when the funding was withdrawn in 2025.

They have also said that repeated changes in funding have affected the delivery of mental health services in schools.

“Without the certainty of a full year of funding, some grantees will lose essential staff and will be unable to properly plan and budget for the fall semester,” California’s attorney general’s office said in a statement on March 18, according to K-12 Dive

The case remains ongoing, with states seeking full restoration of funding and clarity on future disbursements.
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