Trump Administration Freezes $10B — $7B in TANF Grants to Five States, Threatening Aid to Low‑Income Families

The Trump administration has halted roughly $10 billion in federal funding to several programs in five Democratic‑led states, including a $7 billion pause on Temporary Assistance for Needy Families (TANF) block grants for California, Colorado, Illinois, Minnesota and New York. Officials say the action responds to alleged fraud in parts of the federal safety net; the administration has tied the move to a probe into possible misuse of federal child‑care funding in Minnesota.

The U.S. Department of Health and Human Services declined to answer detailed questions from reporters but issued a statement accusing Democratic‑led state governments of being "complicit in allowing massive amounts of fraud to occur under their watch." State leaders have pushed back, and at least one governor has vowed litigation.

What TANF Is and Who It Helps

Created by the 1996 welfare‑reform law, TANF provides states with a fixed block grant to support low‑income families through cash assistance and a range of services. Since the program began, the annual federal allocation has remained $16.5 billion. Analysts at the Center for Law and Social Policy estimate inflation and stagnant funding have eroded the grant’s value by roughly half, and the grant has not been adjusted for population growth.

In fiscal year 2024, just under 1 million families — about 2.7 million people, most of them children — received direct cash aid from TANF. Nationally, only about a quarter of TANF funds were used for direct cash assistance in fiscal year 2023, down from 71% in fiscal year 1997, as states shifted dollars toward other services and as caseloads declined under work requirements and time limits.

How States Use TANF

States have wide discretion in how they spend TANF block grants. Common uses include:

• Direct cash assistance to needy families
• Child care subsidies and child‑welfare services
• Work supports such as job training, job search aid, transportation, and uniforms

Rules, Limits and Controversy

Federal law directs states to use TANF to help children stay cared for at home or with relatives; to reduce parental dependence on government by promoting work, job preparation or marriage; to reduce out‑of‑wedlock pregnancies; and to encourage two‑parent families. The statute also includes a work participation target: states are expected to meet a 50% work participation rate among families with non‑disabled adults receiving cash assistance or face penalties. Many states have effectively lowered their obligations by reducing caseloads.

Cash assistance recipients face a 60‑month lifetime limit on federal TANF funds, though states can extend benefits for hardship cases or use state funds to continue assistance; some states impose shorter limits.

“It’s a relatively small number of families, but it’s ones who would likely be destitute without it,” said Elizabeth Lower‑Basch, a TANF policy expert and social services consultant, warning that the freeze could lead to evictions and difficulty affording food and other basics.

State Responses and What Comes Next

State leaders responded quickly. Colorado said it remains committed to supporting families while New York Governor Kathy Hochul vowed to sue, calling the freeze political and saying children should not be used as "political pawns." Other states are reviewing budget options and potential legal and administrative responses.

The situation is evolving. The freeze affects a program that already operates with constrained resources, raising immediate concerns about cash assistance and a range of services for vulnerable families while legal and oversight disputes play out.

Key sources and figures: $10 billion total frozen; $7 billion of that is TANF block grants to CA, CO, IL, MN, and NY; TANF annual federal allocation: $16.5 billion (unchanged since 1996); ~1 million families (≈2.7 million people) received TANF cash aid in FY2024; ~25% of TANF funds funded cash assistance in FY2023.