By Jeremy H. Racca

Schools across the country recently received important news about federal funding for student mental health services. A federal court in Washington State ruled that the U.S. Department of Education (DOE) acted unlawfully when it attempted to cut off multi-year school mental health grants that many schools were relying on for staffing and student support programs. See State of Washington v. United States Department of Education, No. 2:25-cv-01228-KKE, Western District of Washington (December 19, 2025) (order granting summary judgment and vacating the DOE’s discontinuation of grants because the actions were arbitrary and capricious and contrary to law) https://www.courthousenews.com/wp-content/uploads/2025/12/washington-v-department-of-education-order.pdf.

For schools in New York City and throughout New York State, this decision has immediate and practical implications.

What Happened

Several years ago, Congress created federal grant programs to help schools address the growing shortage of school-based mental health professionals. These grants were awarded as multi-year projects, typically spanning five years, with funding continuing each year as long as schools met basic performance and reporting requirements.

Earlier this year, the DOE abruptly notified many grant recipients that their funding would not continue beyond the current year. The reason given was not poor performance or misuse of funds, but a shift in federal policy priorities tied to a change in the presidential administration’s priorities.  The grant ‘non-continuation’ notices were issued to hundreds of programs because the grants’ use of diversity, equity, and inclusion (DEI) or similar goals conflicted with the Trump DOE’s priorities.

A group of states challenged that decision in court. The court agreed with them and ruled that the Department could not terminate these grants simply because it no longer favored the programs as a matter of policy. The court found that schools reasonably relied on the promised multi-year structure of the grants and that the Department failed to follow its own rules when it cut off funding.

As a result, the court blocked the terminations and restored the grants.

What This Means for New York City and New York State Schools

Grant funding is back on track.
Schools and districts in New York that received these federal mental health grants can expect their funding to continue, provided they remain in compliance with documented grant requirements. The DOE may not enforce the earlier termination notices or reissue them for the same reasons.

Schools can plan with confidence again.
Many schools paused hiring, delayed contracts with mental health providers, or scaled back services out of concern that funding would disappear. This decision allows schools to resume long-term planning, staffing, and programming based on the original grant timelines.

The ruling is not limited to one state.
Although the lawsuit was brought by a group of states, the court’s decision applies nationwide. New York schools and other grantees are protected to the same extent as grantees in any other state that received the affected grants.

Future grant decisions must follow the rules.
For now, the federal government must base continuation decisions on school performance, fiscal responsibility, and compliance, not on shifting political priorities. That distinction matters for schools that depend on federal funding to serve high-need student populations.

What Schools Should Do Now

Schools and other affected grantees should take this opportunity to:

       •   Confirm the status of any affected mental health grants

       •   Resume or continue staffing and program development tied to those grants

       •   Ensure ongoing compliance with reporting and performance requirements

       •   Prepare strategically for future federal funding opportunities

Federal grants can be powerful tools, but they also come with complex rules and shifting administrative interpretations. Understanding how these decisions affect your school and how to protect your funding often requires experienced legal guidance.

How We Can Help

If your school has questions about how this decision affects existing grants, wants help reviewing grants for ongoing or future compliance, or needs guidance on upcoming funding opportunities, we are well positioned to help.

Please contact our office to discuss how this decision and the evolving funding landscape may affect your school.

 

This is not legal advice and is attorney advertising.