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IMLA Federal Funding Update

Amanda Karras

Tue, Jul 15, 2025 6:58 PM

Good afternoon:

You may have seen there is a new lawsuit filed by a coalition of states challenging the US Department of Education's (ED) and OMB's actions freezing $6 billion in education funding for K-12 schools and adult education. The case, California v. McMahon, highlights that these are formula grants appropriated by Congress for six specific programs and were supposed to be made available to the States by 7/1. According to the complaint, the ED sent an email to the States on 6/30 indicating the funds were being withheld for review to ensure consistency with the President's priorities.

The States argue:

First, the failure to make these funds available is contrary to each of the Impacted Programs' authorizing statutes, which require that ED award or allocate funds to the States according to the formulas set by Congress; the applicable appropriations acts, which require that these funds become available for obligation by the Secretary on July 1, 2025; and ED regulations, which provide that these funds are available for the States to obligate once they are made available to the Secretary. None of the authorizing statutes for these formula grants confer discretion on the Agency Defendants to withhold funding to conduct the discretionary "review" being taken here

Second, OMB has also violated its statutory responsibilities under the Antideficiency Act to apportion funds to ED, so that ED can award the funds to the States.

Third, the withholding of these funds is contrary to the Impoundment Control Act, which places constraints on the Agency Defendants' ability to choose not to spend appropriated formula funds... The Agency Defendants have thus acted ultra vires, contrary to law, in excess of statutory authority, and in violation of the Administrative Procedure Act (APA).

The ED Funding Freeze likewise violates the APA's prohibition on arbitrary and capricious agency conduct. The Agency Defendants' attempt to assert their authority to withhold funds for the Impacted Programs to conduct a review for consistency with the "President's priorities," through a cursory three-sentence e-mail, falls far short of the Agency Defendants' requirement to provide a detailed justification for their decisions, which implicate serious reliance interests...

The Defendants have also violated the U.S. Constitution, including the separation of powers doctrine and the Presentment Clause.

You can review the complaint here: https://oag.ca.gov/system/files/attachments/press-docs/1%5B83%5D.pdf

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Amanda Karras (she/her)
Executive Director / General Counsel
International Municipal Lawyers Association
P: (202) 466-5424 x7116
D: (202) 742-1018
51 Monroe St. Suite 404 Rockville, MD, 20850
Plan Ahead! See IMLA's upcoming eventshttps://imla.org/events/, calls and programming.

Good afternoon: You may have seen there is a new lawsuit filed by a coalition of states challenging the US Department of Education's (ED) and OMB's actions freezing $6 billion in education funding for K-12 schools and adult education. The case, California v. McMahon, highlights that these are formula grants appropriated by Congress for six specific programs and were supposed to be made available to the States by 7/1. According to the complaint, the ED sent an email to the States on 6/30 indicating the funds were being withheld for review to ensure consistency with the President's priorities. The States argue: First, the failure to make these funds available is contrary to each of the Impacted Programs' authorizing statutes, which require that ED award or allocate funds to the States according to the formulas set by Congress; the applicable appropriations acts, which require that these funds become available for obligation by the Secretary on July 1, 2025; and ED regulations, which provide that these funds are available for the States to obligate once they are made available to the Secretary. None of the authorizing statutes for these formula grants confer discretion on the Agency Defendants to withhold funding to conduct the discretionary "review" being taken here Second, OMB has also violated its statutory responsibilities under the Antideficiency Act to apportion funds to ED, so that ED can award the funds to the States. Third, the withholding of these funds is contrary to the Impoundment Control Act, which places constraints on the Agency Defendants' ability to choose not to spend appropriated formula funds... The Agency Defendants have thus acted ultra vires, contrary to law, in excess of statutory authority, and in violation of the Administrative Procedure Act (APA). The ED Funding Freeze likewise violates the APA's prohibition on arbitrary and capricious agency conduct. The Agency Defendants' attempt to assert their authority to withhold funds for the Impacted Programs to conduct a review for consistency with the "President's priorities," through a cursory three-sentence e-mail, falls far short of the Agency Defendants' requirement to provide a detailed justification for their decisions, which implicate serious reliance interests... The Defendants have also violated the U.S. Constitution, including the separation of powers doctrine and the Presentment Clause. While many local governments do not directly fund or operate their school districts (some do), there are many localities that do help run summer school and after school programs, which would be impacted by a loss in these funds. NLC wrote a blog about this here: https://www.nlc.org/article/2025/07/11/how-a-federal-funding-freeze-impacts-afterschool-and-summer-learning-programs/. You can review the complaint here: https://oag.ca.gov/system/files/attachments/press-docs/1%5B83%5D.pdf [logo]<https://imla.org/> [facebook icon]<https://www.facebook.com/InternationalMunicipalLawyersAssociation/>[twitter icon]<https://twitter.com/imlalegal>[linkedin icon]<https://www.linkedin.com/company/international-municipal-lawyers-association-inc./> Amanda Karras (she/her) Executive Director / General Counsel International Municipal Lawyers Association P: (202) 466-5424 x7116 D: (202) 742-1018 51 Monroe St. Suite 404 Rockville, MD, 20850 Plan Ahead! See IMLA's upcoming events<https://imla.org/events/>, calls and programming.

Amanda Karras

Tue, Jul 15, 2025 8:18 PM

Good afternoon,

I wanted to let you know that there is an opportunity to join a separate lawsuit being put together by local governments related to the billions being withheld by the Department of Education discussed in my email below. Any localities interested in joining this separate lawsuit involving local school districts should contact Dan Jacobson dan@jacobsonlawyersgroup.com mailto:dan@jacobsonlawyersgroup.com. My understanding from Dan is that the case is in partnership with Democracy Forward and the plaintiffs will not bear any fees for the case. Obviously, any interested entities should do their due diligence on that front.

Thanks,
Amanda

[logo]https://imla.org/

From: Amanda Karras via Cityattorneys cityattorneys@lists.imla.org
Sent: Tuesday, July 15, 2025 2:59 PM
Subject: [Cityattorneys] IMLA Federal Funding Update

Good afternoon:

The States argue:

Second, OMB has also violated its statutory responsibilities under the Antideficiency Act to apportion funds to ED, so that ED can award the funds to the States.

The Defendants have also violated the U.S. Constitution, including the separation of powers doctrine and the Presentment Clause.

While many local governments do not directly fund or operate their school districts (some do), there are many localities that do help run summer school and after school programs, which would be impacted by a loss in these funds. NLC wrote a blog about this here: https://www.nlc.org/article/2025/07/11/how-a-federal-funding-freeze-impacts-afterschool-and-summer-learning-programs/https://urldefense.proofpoint.com/v2/url?u=https-3A__www.nlc.org_article_2025_07_11_how-2Da-2Dfederal-2Dfunding-2Dfreeze-2Dimpacts-2Dafterschool-2Dand-2Dsummer-2Dlearning-2Dprograms_&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=0KXEgqxULQ2o_ClHfCZDdw6rFjfbQWaUAjYrv7JI7g8&e=.

You can review the complaint here: https://oag.ca.gov/system/files/attachments/press-docs/1%5B83%5D.pdf https://urldefense.proofpoint.com/v2/url?u=https-3A__oag.ca.gov_system_files_attachments_press-2Ddocs_1-255B83-255D.pdf&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=oDsHfbeXiddT1oUYNpF0ZxTDv9VUWMRAmMAYMI4I5a0&e=

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Amanda Karras (she/her)
Executive Director / General Counsel
International Municipal Lawyers Association
P: (202) 466-5424 x7116
D: (202) 742-1018
51 Monroe St. Suite 404 Rockville, MD, 20850
Plan Ahead! See IMLA's upcoming eventshttps://urldefense.proofpoint.com/v2/url?u=https-3A__imla.org_events_&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=sNWgpcM1X160egTfcQjbbkJhbRkSoJsRK588DIdseQs&e=, calls and programming.

Good afternoon, I wanted to let you know that there is an opportunity to join a separate lawsuit being put together by local governments related to the billions being withheld by the Department of Education discussed in my email below. Any localities interested in joining this separate lawsuit involving local school districts should contact Dan Jacobson dan@jacobsonlawyersgroup.com<mailto:dan@jacobsonlawyersgroup.com>. My understanding from Dan is that the case is in partnership with Democracy Forward and the plaintiffs will not bear any fees for the case. Obviously, any interested entities should do their due diligence on that front. Thanks, Amanda [logo]<https://imla.org/> [facebook icon]<https://www.facebook.com/InternationalMunicipalLawyersAssociation/>[twitter icon]<https://twitter.com/imlalegal>[linkedin icon]<https://www.linkedin.com/company/international-municipal-lawyers-association-inc./> Amanda Karras (she/her) Executive Director / General Counsel International Municipal Lawyers Association P: (202) 466-5424 x7116 D: (202) 742-1018 51 Monroe St. Suite 404 Rockville, MD, 20850 Plan Ahead! See IMLA's upcoming events<https://imla.org/events/>, calls and programming. From: Amanda Karras via Cityattorneys <cityattorneys@lists.imla.org> Sent: Tuesday, July 15, 2025 2:59 PM Subject: [Cityattorneys] IMLA Federal Funding Update Good afternoon: You may have seen there is a new lawsuit filed by a coalition of states challenging the US Department of Education's (ED) and OMB's actions freezing $6 billion in education funding for K-12 schools and adult education. The case, California v. McMahon, highlights that these are formula grants appropriated by Congress for six specific programs and were supposed to be made available to the States by 7/1. According to the complaint, the ED sent an email to the States on 6/30 indicating the funds were being withheld for review to ensure consistency with the President's priorities. The States argue: First, the failure to make these funds available is contrary to each of the Impacted Programs' authorizing statutes, which require that ED award or allocate funds to the States according to the formulas set by Congress; the applicable appropriations acts, which require that these funds become available for obligation by the Secretary on July 1, 2025; and ED regulations, which provide that these funds are available for the States to obligate once they are made available to the Secretary. None of the authorizing statutes for these formula grants confer discretion on the Agency Defendants to withhold funding to conduct the discretionary "review" being taken here Second, OMB has also violated its statutory responsibilities under the Antideficiency Act to apportion funds to ED, so that ED can award the funds to the States. Third, the withholding of these funds is contrary to the Impoundment Control Act, which places constraints on the Agency Defendants' ability to choose not to spend appropriated formula funds... The Agency Defendants have thus acted ultra vires, contrary to law, in excess of statutory authority, and in violation of the Administrative Procedure Act (APA). The ED Funding Freeze likewise violates the APA's prohibition on arbitrary and capricious agency conduct. The Agency Defendants' attempt to assert their authority to withhold funds for the Impacted Programs to conduct a review for consistency with the "President's priorities," through a cursory three-sentence e-mail, falls far short of the Agency Defendants' requirement to provide a detailed justification for their decisions, which implicate serious reliance interests... The Defendants have also violated the U.S. Constitution, including the separation of powers doctrine and the Presentment Clause. While many local governments do not directly fund or operate their school districts (some do), there are many localities that do help run summer school and after school programs, which would be impacted by a loss in these funds. NLC wrote a blog about this here: https://www.nlc.org/article/2025/07/11/how-a-federal-funding-freeze-impacts-afterschool-and-summer-learning-programs/<https://urldefense.proofpoint.com/v2/url?u=https-3A__www.nlc.org_article_2025_07_11_how-2Da-2Dfederal-2Dfunding-2Dfreeze-2Dimpacts-2Dafterschool-2Dand-2Dsummer-2Dlearning-2Dprograms_&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=0KXEgqxULQ2o_ClHfCZDdw6rFjfbQWaUAjYrv7JI7g8&e=>. You can review the complaint here: https://oag.ca.gov/system/files/attachments/press-docs/1%5B83%5D.pdf<https://urldefense.proofpoint.com/v2/url?u=https-3A__oag.ca.gov_system_files_attachments_press-2Ddocs_1-255B83-255D.pdf&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=oDsHfbeXiddT1oUYNpF0ZxTDv9VUWMRAmMAYMI4I5a0&e=> [logo]<https://urldefense.proofpoint.com/v2/url?u=https-3A__imla.org_&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=4TjSe8kgVy6FinWK3_XbHJQFDzQqec_TI26BBPxmH9A&e=> [facebook icon]<https://urldefense.proofpoint.com/v2/url?u=https-3A__www.facebook.com_InternationalMunicipalLawyersAssociation_&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=CjkTvd2RucKPLblZH4JuwpyMuoagTaOKcAJPrQw7KLo&e=>[twitter icon]<https://urldefense.proofpoint.com/v2/url?u=https-3A__twitter.com_imlalegal&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=E17WHiYhU5ualMhhfBmiUHP8un4QzsmAAl1xKKem5y0&e=>[linkedin icon]<https://urldefense.proofpoint.com/v2/url?u=https-3A__www.linkedin.com_company_international-2Dmunicipal-2Dlawyers-2Dassociation-2Dinc._&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=Gq4GoTh43tt0Qgv4pd_gCCOQPb9LdHYdOG4bKxpVawM&e=> Amanda Karras (she/her) Executive Director / General Counsel International Municipal Lawyers Association P: (202) 466-5424 x7116 D: (202) 742-1018 51 Monroe St. Suite 404 Rockville, MD, 20850 Plan Ahead! See IMLA's upcoming events<https://urldefense.proofpoint.com/v2/url?u=https-3A__imla.org_events_&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=jblVzryv37xz6dGHTIBd0omyr7IZ_ghleJygNWPo2JE&m=urmZnxJLCxNvr7pfA8iUTeOsL8S9iILBhMP8RWFwARDRB6Wec4PDSXa0o4BpcAzI&s=sNWgpcM1X160egTfcQjbbkJhbRkSoJsRK588DIdseQs&e=>, calls and programming.