Federal Judge Temporarily Blocks New Cuts to School Mental-Health Grants

A federal judge has temporarily blocked the Education Department from carrying out a new round of cuts to school mental-health grants, giving states and school districts short-term planning relief as the legal fight continues before the 2026-27 school year.

Judge Kymberly K. Evanson of the U.S. District Court for the Western District of Washington issued the temporary restraining order on July 27, 2026. A multistate coalition filed the new lawsuit on July 10 after the department announced plans to eliminate or terminate grants by the end of July.

The order prevents the challenged terminations for now. It is not a final ruling on the states’ claims and does not permanently guarantee that districts will receive the money without interruption.

Which grants are affected

The dispute involves the Mental Health Service Professional Demonstration Grant Program and the School-Based Mental Health Services Grant Program. The grants support schools and districts as they recruit, train and retain counselors, psychologists, social workers and other qualified mental-health providers.

The funding is used for school-based staffing and services, including in high-need communities. It is not a new nationwide benefit paid directly to families.

Why the states sued

The states argue that the Education Department cannot cancel multiyear, congressionally funded awards merely because administration priorities have changed. They also contend that the department relied on unpublished or newly changed priorities and failed to follow statutory and administrative procedures.

Those are legal claims made by the states in the new case, not a final determination on every issue. The temporary order keeps the department from completing the challenged cuts while the court considers the case and the federal government’s response.

Bloomberg Law reported that the Education Department did not immediately respond to a request for comment.

A longer fight over federal grant authority

The July 2026 lawsuit is separate from, but related to, earlier litigation over school mental-health funding. That earlier case was filed on June 30, 2025. The district court issued a preliminary injunction on October 27, 2025, and granted summary judgment to the states on December 19, 2025.

On February 24, 2026, the U.S. Court of Appeals for the Ninth Circuit denied the department’s request to stay that relief while the appeal proceeded. The appellate court said the department had not shown a strong likelihood of success on the states’ Administrative Procedure Act claims. It also noted that the department had issued identical notices to 138 grantees based on unpublished priorities in an internal directive and that the generic notices did not adequately explain the grounds for individual grant discontinuations.

The Ninth Circuit’s action addressed the request for a stay pending appeal. It was not a final merits resolution of every issue in the broader dispute.

How large is the dispute?

State officials have described the broader program dispute as involving approximately $1 billion in funding. That estimate should not be confused with a separate count in a June 22, 2026 Education Department inspector general report.

The inspector general reported that the department had identified 223 additional grants totaling $252 million for termination during the period reviewed. The identified grants included 153 Mental Health Service Professional Demonstration grants and 70 School-Based Mental Health grants. Identification for termination is not the same as proof that every award was ultimately canceled, and the $252 million figure does not represent the full value of the two mental-health programs.

What schools and families should watch

For now, the order prevents the Education Department from carrying out the challenged terminations. That may help districts plan staffing and services for the 2026-27 school year, but the protection is temporary.

Districts should not treat the funding as permanently secure. The case remains active, and the next significant developments could include additional district-court orders, revised grant decisions or an appeal by the federal government. The central question is whether the department may discontinue multiyear grants based on changed priorities and generic notices without following the procedures required by federal law.

Sources

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